Fortnightly - Wisconsin PSChttp://www.fortnightly.com/tags/wisconsin-psc
enPeople (November 2011)http://www.fortnightly.com/fortnightly/2011/11/people-november-2011
<div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">People</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - November 2011</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><b>Exelon</b> announced senior executive changes upon the completion of the <b>Exelon-Constellation</b> merger. <b>Denis P. O’Brien</b>, currently executive v.p. of Exelon and president and CEO of PECO, will become senior executive v.p. of Exelon Corp. and CEO of Exelon Utilities. <b>William A. Von Hoene Jr.</b>, currently executive v.p., finance and legal, will become senior executive v.p. and chief strategy officer for the combined company. <b>Matthew F. Hilzinger</b>, currently senior v.p. and CFO for Exelon, will become executive v.p. and chief integration officer. <b>Jonathan W. “Jack” Thayer</b>, currently CFO for Constellation Energy, will become executive v.p. and CFO of the combined company. <b>Craig Adams</b>, currently senior v.p. and COO of PECO, will become PECO’s CEO. <b>Anne Pramaggiore</b>, currently president and COO of ComEd, will become ComEd’s CEO. <b>Kenneth W. Cornew</b>, currently senior v.p. of Exelon and president of Exelon Power Team, will become executive v.p. and chief commercial officer of Exelon and president and CEO of Constellation.</p>
<p><b>Xcel Energy</b> named <b>Teresa S. Madden</b> senior v.p. and CFO. Formerly, Madden was v.p. and controller at Xcel and its predecessor company, Public Service Co. of Colorado. <b>Scott Wilensky</b> was named senior v.p. and general counsel. Wilensky previously was v.p., regulatory and resource planning, for all Xcel Energy operating companies. <b>Dave Sparby</b>, who was previously v.p. and CFO, will now become senior v.p. and group president.</p>
<p><b>Sempra Energy</b> elected <b>Mark A. Snell</b> president. Snell previously served as Sempra’s executive v.p. and CFO, and succeeds Neal E. Schmale. <b>Joseph A. Householder</b> succeeds Snell as executive v.p. and CFO of Sempra Energy. Householder previously served as senior v.p., controller and chief accounting officer.</p>
<p><b>FirstEnergy Nuclear Operating Co. (FENOC)</b> named <b>Kevin Ostrowski</b> v.p. of fleet oversight, succeeding <b>Karen Fili</b> who became director of fleet operations support. Fili succeeds <b>Fred Cayia</b>, who was named director of fleet performance improvement. </p>
<p><b>American Electric Power</b> promoted <b>Dennis E. Welch</b> to executive v.p. and chief administrative officer. Welch previously served as executive v.p. of environment, safety, health and facilities.</p>
<p><b>Alterra Power Corp.</b> appointed <b>John Carson</b> as CEO. Carson was executive v.p. of Alterra since early this year when he joined Alterra’s predecessor company Magma Energy.</p>
<p><b>California Independent System Operator (ISO)</b> appointed <b>Eric Schmitt</b> as v.p. operations. Schmitt was previously senior v.p. at Science Applications International Corp. (SAIC), and will replace Steve Berberich who was appointed ISO president and CEO in June.</p>
<p>The <b>Organization of MISO States (OMS)</b> elected new officers to serve the remainder of 2011.</p>
<p>Commissioner <b>Robert Kenney</b>, a member of the Missouri Public Service Commission (PSC), will complete the term of the departing president, Monica Martinez. Chairman <b>Tony Clark</b> of the North Dakota PSC will replace Iowa Utilities Board Commissioner <b>Rob Berntsen</b> as secretary of the OMS. Commissioner <b>Eric Callisto</b> of the Wisconsin PSC will serve as an at-large member of the OMS executive committee, replacing Commissioner Kenney. Commissioner <b>Kari Bennett</b> of the Indiana Utility Regulatory Commission was nominated as OMS v.p., replacing David Armstrong of the Kentucky PSC, who remains an OMS board member.</p>
<p>The <b>North American Electric Reliability Corp.</b> appointed <b>Thomas J. Galloway</b>, senior v.p. and chief reliability officer at NERC, as president and CEO at the North American Transmission Forum. Prior to joining NERC, Galloway served as the interim president and CEO for SERC Reliability Corp.</p>
<p><b>FirstEnergy</b> elected <b>Christopher D. Pappas</b> to serve on the company’s board of directors. Pappas is president and CEO of Styron LLC (Trinseo SA).</p>
<p><i>We welcome submissions to </i>People<i>, especially those accompanied by a high-resolution color photograph. E-mail to: <a href="mailto:people@pur.com">people@pur.com</a>. </i></p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/people">People</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/people">People</a></li></ul></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/alterra-power">Alterra Power</a><span class="pur_comma">, </span><a href="/tags/alterra-power-corp">Alterra Power Corp</a><span class="pur_comma">, </span><a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/american-transmission">American Transmission</a><span class="pur_comma">, </span><a href="/tags/anne-pramaggiore">Anne Pramaggiore</a><span class="pur_comma">, </span><a href="/tags/california-independent-system-operator">California Independent System Operator</a><span class="pur_comma">, </span><a href="/tags/comed">ComEd</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/constellat">Constellat</a><span class="pur_comma">, </span><a href="/tags/constellation">Constellation</a><span class="pur_comma">, </span><a href="/tags/constellation-energy">Constellation Energy</a><span class="pur_comma">, </span><a href="/tags/craig-adams">Craig Adams</a><span class="pur_comma">, </span><a href="/tags/dave-sparby">Dave Sparby</a><span class="pur_comma">, </span><a href="/tags/david-armstrong">David Armstrong</a><span class="pur_comma">, </span><a href="/tags/eric-callisto">Eric Callisto</a><span class="pur_comma">, </span><a href="/tags/eric-schmitt">Eric Schmitt</a><span class="pur_comma">, </span><a href="/tags/exelon">Exelon</a><span class="pur_comma">, </span><a href="/tags/fenoc">FENOC</a><span class="pur_comma">, </span><a href="/tags/firstenergy">FirstEnergy</a><span class="pur_comma">, </span><a href="/tags/fred-cayia">Fred Cayia</a><span class="pur_comma">, </span><a href="/tags/indiana-utility-regulatory-commission">Indiana Utility Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/john-carson">John Carson</a><span class="pur_comma">, </span><a href="/tags/joseph-householder">Joseph A. Householder</a><span class="pur_comma">, </span><a href="/tags/karen-fili">Karen Fili</a><span class="pur_comma">, </span><a href="/tags/kari-bennett">Kari Bennett</a><span class="pur_comma">, </span><a href="/tags/kentucky-psc">Kentucky PSC</a><span class="pur_comma">, </span><a href="/tags/kevin-ostrowski">Kevin Ostrowski</a><span class="pur_comma">, </span><a href="/tags/mark-snell">Mark A. Snell</a><span class="pur_comma">, </span><a href="/tags/matthew-f-hilzinger">Matthew F. Hilzinger</a><span class="pur_comma">, </span><a href="/tags/miso">MISO</a><span class="pur_comma">, </span><a href="/tags/missouri-public-service-commission">Missouri Public Service Commission</a><span class="pur_comma">, </span><a href="/tags/nerc">NERC</a><span class="pur_comma">, </span><a href="/tags/north-american-electric-reliability-corp-0">North American Electric Reliability Corp.</a><span class="pur_comma">, </span><a href="/tags/north-dakota-psc">North Dakota PSC</a><span class="pur_comma">, </span><a href="/tags/nuclear">Nuclear</a><span class="pur_comma">, </span><a href="/tags/oms">OMS</a><span class="pur_comma">, </span><a href="/tags/organization-miso-states">Organization of MISO States</a><span class="pur_comma">, </span><a href="/tags/peco">PECO</a><span class="pur_comma">, </span><a href="/tags/public-service-co-colorado">Public Service Co. of Colorado</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/rob-berntsen">Rob Berntsen</a><span class="pur_comma">, </span><a href="/tags/robert-kenney">Robert Kenney</a><span class="pur_comma">, </span><a href="/tags/saic">SAIC</a><span class="pur_comma">, </span><a href="/tags/science-applications-international-corp">Science Applications International Corp</a><span class="pur_comma">, </span><a href="/tags/science-applications-international-corp-0">Science Applications International Corp.</a><span class="pur_comma">, </span><a href="/tags/scott-wilensky">Scott Wilensky</a><span class="pur_comma">, </span><a href="/tags/sempra">Sempra</a><span class="pur_comma">, </span><a href="/tags/sempra-energy">Sempra Energy</a><span class="pur_comma">, </span><a href="/tags/serc-reliability-corp">SERC Reliability Corp</a><span class="pur_comma">, </span><a href="/tags/steve-berberich">Steve Berberich</a><span class="pur_comma">, </span><a href="/tags/teresa-s-madden">Teresa S. Madden</a><span class="pur_comma">, </span><a href="/tags/tony-clark">Tony Clark</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a><span class="pur_comma">, </span><a href="/tags/william-von-hoene">William A. Von Hoene</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a><span class="pur_comma">, </span><a href="/tags/xcel-energy">Xcel Energy</a> </div>
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Tue, 01 Nov 2011 04:00:00 +0000puradmin13500 at http://www.fortnightly.comPeople (November 2010)http://www.fortnightly.com/fortnightly/2010/11/people-november-2010
<div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">People</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - November 2010</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><span class="boldred">New Opportunities: </span><b>DTE Energy</b> announced that president and COO <b>Gerard M. Anderson </b>became president and CEO October 1, taking the reins from <b>Anthony F. Earley Jr.</b> Earley assumed the title of executive chairman of the board and continues as a full-time employee.</p>
<p><b>DPL </b>appointed <b>Arthur Meyer</b> as general counsel of DPL and Dayton Power &amp; Light. He retains duties as senior v.p., corporate and regulatory affairs.</p>
<p><b>Exelon </b>promoted <b>Calvin Butler Jr.</b> to senior v.p. of human resources for Exelon. He previously served as senior v.p. of corporate affairs for ComEd. <b>Victor Fonseca </b>is appointed senior v.p. of compensation and benefits; <b>John Samolis</b> to senior v.p. of labor relations; <b>Michael Campbell </b>to v.p., talent management and HR operations; <b>Ellen Caya</b> to v.p. of cyber and physical security; and <b>Susan Weiss</b> to v.p. of Exelon’s commercial operations group. Exelon also named <b>Mary Streett </b>as v.p. of federal government affairs and <b>Jackie Carney</b> as director of federal government affairs. Streett joins from Mayer Brown LLP and Carney from Bill Carney &amp; Co.</p>
<p><b>OGE Energy</b> appointed <b>William J. Bullard</b> as general counsel for Oklahoma Gas &amp; Electric (OG&amp;E), while continuing to serve as assistant general counsel of PGE Energy.</p>
<p><b>Ameren</b> named <b>Maureen A. Borowski</b> as president and CEO of a new subsidiary dedicated to electric transmission infrastructure investment, Ameren Transmission.</p>
<p><b>GeoGlobal Energy</b> added three geothermal professionals to its technical team. <b>Bob Swanson</b> joined the company as drilling manager, <b>Jim Stimac</b> as senior geologist, and <b>Paula Blaydes</b> as director of environmental permitting and governmental affairs.</p>
<p>The <b>Deloitte Center for Energy Solutions</b> named<b> Branko Terzic</b> executive director. He will continue in his role as regulatory policy leader in Deloitte’s energy &amp; resources industry group. He is a former commissioner at FERC and the Wisconsin PSC.</p>
<p><b>Deloitte </b>added <b>William Hederman</b> to its energy and resources industry group. He was the FERC’s founding director of the market oversight and investigations office.</p>
<p><b>Alison Smith</b>, a former U.S. assistant attorney general, joined <b>McDermott Will &amp; Emery</b> as a partner in the firm’s global antitrust and competition practice group. Smith was principal deputy of the Department of Justice antitrust division and was responsible for enforcement in regulated industries.</p>
<p><b>Steptoe &amp; Johnson</b> on September 1 acquired the energy practice group of the western Pennsylvania law firm of Culbertson, Weiss, Schetroma and Schug. The practice is led by <b>Russell Schetroma</b>, whose practice focuses on oil and gas transactions, most notably the Marcellus shale formation.</p>
<p><b>Chesapeake Utilities</b> announced that <b>Jeffrey R. Tietbohl</b>, v.p., was appointed president of the Maryland-District of Columbia Utilities Association.</p>
<p><b>Atmos Energy</b> appointed <b>Kim Cocklin</b> president and CEO from president and COO. The company also appointed <b>Robert Best</b>, chairman of the board and CEO as executive chairman.</p>
<p>The <b>Electric Power Research Institute </b>(EPRI) promoted <b>Arshad Mansoor</b> from v.p. of EPRI’s power delivery and utilization sector to senior v.p. of research and development. <b>Chris Larson </b>was hired as senior v.p. of operations and comes from service as v.p. and general manager of the nuclear division of Control Components.</p>
<p>The <b>North American Energy Standards Board</b> (NAESB), an industry association for the standardization of wholesale and retail markets for gas and electricity, recently appointed Dr. <b>Scott Coe</b>, vice president of Utility Integration Solutions, Inc. (UISOL) to the Wholesale Electric Quadrant (WEQ) in the technology and services segment.</p>
<p>The <b>U.S. Department of Commerce’s National Institute of Standards and Technology</b> (NIST) appointed Dr. <b>Lawrence E. Jones</b> to a three-year term on the newly-formed 15-member smart grid advisory committee. Jones is global director of strategy and special projects at Alstom. NIST also appointed to the committee <b>Kevin Nolan</b>, vice president of technology for GE Appliances. NIST created the 15-member committee to advise the institute in its efforts to implement smart grid requirements outlined in the <i>Energy Independence and Security Act of 2007</i>.</p>
<p>The <b>American Gas Association </b>(AGA) elected<b> John W. Somerhalder II</b>, CEO of AGL Resources, to serve as chairman of AGA’s board for 2011. The association also elected and re-elected numerous other industry executives to serve on the AGA’s 39-member board. New members elected for a three-year term include: <b>Lawrence T. Borgard</b>, president and COO, Utilities, Integrys Energy Group; <b>Gordon L. Gillette</b>, president, Tampa Electric and Peoples Gas; <b>Edward J. Graham</b>, CEO, South Jersey Industries; <b>Thomas E. Knudsen</b>, CEO, Philadelphia Gas Works; <b>Rodney O. Powell</b>, president &amp; COO, Yankee Gas; and <b>George A. Schreiber, Jr.</b>, CEO, Continental Energy Systems.</p>
<p> </p>
<p><span class="boldred">Boards of Directors: </span><b>Madison Gas and Electric Co.</b> (MGE) elected <b>Mark D. Bugher </b>to the boards of MGE and MGE Energy. He chairs the Wisconsin Technology Council.</p>
<p><b>Sempra Energy</b> re-elected <b>Luis Tellez </b>to its board of directors. He is chairman of the board and CEO of the Mexican stock exchange.</p>
<p><b>ISO New England </b>announced the resignation of <b>Richard E. Kessel</b> from its board, because he accepted a position with a market participant that precludes his continued service.</p>
<p>The <b>National Mining Association </b>elected a slate of officers for a two-year term 2010-2012: <b>Chairman-Greg Boyce,</b> chairman and CEO, Peabody Energy; Vice Chairman-Frank <b>McAllister</b>, chairman and CEO, Stillwater Mining; President-<b>Hal Quinn</b>, president and CEO, NMA; Treasurer-<b>Roger Roberts</b>, <b>senior vice president, NMA; Secretary-Bruce Watzman</b>, senior vice president, NMA; Asst. Secretary-<b>Katie Sweeney</b>, general counsel, NMA.</p>
<p><b>On-Ramp Wireless</b> added <b>John E. Bryson</b> and <b>Thomas R. McDaniel</b> to its advisory board. Bryson is a senior advisor at KKR and a board member at Boeing, The Walt Disney Co., and CODA Automotive. He served at Edison International, the parent company of Southern California Edison, as chairman, president and CEO, and at the Edison Mission Group. McDaniel recently retired from Edison International after 37 years, most recently as executive vice president, CFO and treasurer. He also was CEO and a director of Edison Mission Energy and CEO and a director of Edison Capital. McDaniel serves on the board of Sun Power Corp.</p>
<p><b>Utility Integration Solutions, Inc. </b>(UISOL) announced that environmental advocate <b>Robert F. Kennedy, Jr.</b> has joined the company’s board of directors.</p>
<p> </p>
<p><span class="boldred">Resignations: </span><b>El Paso Electric </b>announced the resignation of <b>George A. Williams, </b>senior v.p. and COO, to pursue other opportunities.</p>
<p><b>Otter Tail </b>announced the resignation of L<b>auris Molbert </b>as executive v.p. and COO effective Dec. 30.</p>
<p> </p>
<p><i>We welcome submissions to People, especially those accompanied by a high-resolution color photograph. E-mail to: <a href="mailto:people@pur.com">people@pur.com</a>.</i></p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/people">People</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/people">People</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/1011/images/1011-cvr.jpg" width="1121" height="1500" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/aes">AES</a><span class="pur_comma">, </span><a href="/tags/aga">AGA</a><span class="pur_comma">, </span><a href="/tags/agl-resources">AGL Resources</a><span class="pur_comma">, </span><a href="/tags/alstom">Alstom</a><span class="pur_comma">, </span><a href="/tags/ameren">Ameren</a><span class="pur_comma">, </span><a href="/tags/american-gas-association">American Gas Association</a><span class="pur_comma">, </span><a href="/tags/anthony-f-earley-jr">Anthony F. Earley Jr.</a><span class="pur_comma">, </span><a href="/tags/boeing">Boeing</a><span class="pur_comma">, </span><a href="/tags/chesapeake-utilities">Chesapeake Utilities</a><span class="pur_comma">, </span><a href="/tags/coda-automotive">CODA Automotive</a><span class="pur_comma">, </span><a href="/tags/comed">ComEd</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/dpl">DPL</a><span class="pur_comma">, </span><a href="/tags/dte-energy">DTE Energy</a><span class="pur_comma">, </span><a href="/tags/edison-international">Edison International</a><span class="pur_comma">, </span><a href="/tags/edison-mission-energy">Edison Mission Energy</a><span class="pur_comma">, </span><a href="/tags/el-paso-electric">El Paso Electric</a><span class="pur_comma">, </span><a href="/tags/electric-power-research">Electric Power Research</a><span class="pur_comma">, </span><a href="/tags/electric-power-research-institute">Electric Power Research Institute</a><span class="pur_comma">, </span><a href="/tags/energy-independence-and-security-act">Energy Independence and Security Act</a><span class="pur_comma">, </span><a href="/tags/epri">EPRI</a><span class="pur_comma">, </span><a href="/tags/esb">ESB</a><span class="pur_comma">, </span><a href="/tags/exelon">Exelon</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/ge">GE</a><span class="pur_comma">, </span><a href="/tags/integration">Integration</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/iso-new-england">ISO New England</a><span class="pur_comma">, </span><a href="/tags/lawrence-t-borgard">Lawrence T. Borgard</a><span class="pur_comma">, </span><a href="/tags/madison-gas-and-electric">Madison Gas and Electric</a><span class="pur_comma">, </span><a href="/tags/mge-energy">MGE Energy</a><span class="pur_comma">, </span><a href="/tags/national-institute-standards-and-technology">National Institute of Standards and Technology</a><span class="pur_comma">, </span><a href="/tags/nist">NIST</a><span class="pur_comma">, </span><a href="/tags/oge-energy">OGE Energy</a><span class="pur_comma">, </span><a href="/tags/peabody-energy">Peabody Energy</a><span class="pur_comma">, </span><a href="/tags/peoples-gas">Peoples Gas</a><span class="pur_comma">, </span><a href="/tags/security">Security</a><span class="pur_comma">, </span><a href="/tags/sempra">Sempra</a><span class="pur_comma">, </span><a href="/tags/sempra-energy">Sempra Energy</a><span class="pur_comma">, </span><a href="/tags/south-jersey-industries">South Jersey Industries</a><span class="pur_comma">, </span><a href="/tags/southern-california-edison">Southern California Edison</a><span class="pur_comma">, </span><a href="/tags/tampa-electric">Tampa Electric</a><span class="pur_comma">, </span><a href="/tags/technology">Technology</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a><span class="pur_comma">, </span><a href="/tags/uisol">UISOL</a><span class="pur_comma">, </span><a href="/tags/utility-integration-solutions">Utility Integration Solutions</a><span class="pur_comma">, </span><a href="/tags/williams">Williams</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a> </div>
</div>
Mon, 01 Nov 2010 04:00:00 +0000puradmin13570 at http://www.fortnightly.com2008 ROE Survey - Rates, Risks & Regulatorshttp://www.fortnightly.com/fortnightly/2008/11/2008-roe-survey-rates-risks-regulators
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Economic uncertainties raise doubts about utility returns.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Phillip S. Cross</p>
</div></div></div><div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">Commission Watch</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p><b>Phillip S. Cross</b> is <em>Fortnightly’s</em> legal editor. Email him at <a href="mailto:pcross@pur.com">pcross@pur.com</a>.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - November 2008</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/0811/images/0811-CW-table.jpg" width="2044" height="1405" alt="" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/0811-CW-fig1pt2.jpg" width="1500" height="2102" alt="" /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/0811-CW-fig1pt3.jpg" width="1500" height="2044" alt="" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/0811-CW-fig1pt4.jpg" width="1500" height="894" alt="" /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/0811-CW-fig1pt5.jpg" width="1500" height="1333" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Recent shocking and unprecedented news in financial markets brings to mind several questions about utility rate cases and authorized returns. Given that utility regulators rely on financial models when seeking to determine the cost of capital for a utility, one might ask what effect stock prices and interest rates will have on the process. Will regulators feel a need to consider broader economic effects when engaging in a process that is often closely watched by the investment community?</p>
<p>In this time of economic uncertainty, utility investors are reminded that authorized return on equity (ROE) allowances aren’t actual earnings, but rather the rates utilities and regulators use to determine how much money<i> </i>consumers must pay to make it possible for the utility to earn a reasonable profit and to attract investors in the future.<i> </i>As such, the award is not a guarantee.<i> </i>To earn the ROE set by a commission, the utility must keep future expenses and sales at or near the levels as during<i> </i>a 12-month proxy period known as<i> </i>the “test year.”</p>
<p>In extraordinary times like these, regulators should expect some extraordinary testimony from the financial experts who appear as witnesses in rate cases.</p>
<h4>The Ratemaking Formula</h4>
<p>Reported here are results of <i>Fortnightly’s</i> annual survey of utility rate cases. The survey, which reports the statistical results of traditional rate proceedings, provides a sample of major retail electric and natural gas rate cases conducted by state regulators across the nation. (And this year, for comparison, we included several Ontario rate cases.)</p>
<p>When setting rates, regulators gather information about what it will cost the utility to run the company, including operating expense, taxes and depreciation, short and long-term borrowing, plus the fair return on investment. To arrive at an amount of money to be collected from ratepayers for the return component of rates, the value of the company’s property, or rate base, is<i> </i>calculated and the ROE rate is applied to that figure. The resulting number<i> </i>of dollars is then added to the cost-of-service ratemaking formula to arrive at a total revenue requirement for the utility.</p>
<p>Given this, it’s easy to understand why the ROE part of a rate case often<i> </i>is the most contentious. First, while expenses and other costs might be<i> </i>determined with some level of certainty, the amount of profit that’s considered “fair” certainly is subject to debate.</p>
<p>Additionally, the second part of the issue—what level of return is necessary to attract investment in the company and provide incentives for managers<i> </i>to make business decisions that benefit consumers—also is a question tailor-made for debate, and for analysis by financial consultants and attorneys.</p>
<p>In a case reported in this year’s ROE survey, the Wisconsin Public Service Commission (PSC) discussed the<i> </i>distinction between the “bare-bones” cost of capital, as revealed by statistical<i> </i>models, and the appropriate ROE<i> </i>award for ratemaking purposes. The PSC explained one view: The cost of equity represents the target for the return on equity. According to this perspective, financial-model results are the central focus, and absent extraordinary circumstances, the regulator should set the ROE at its best estimate of the utility’s cost of equity.</p>
<p>An opposing view also was offered by the PSC: The cost of equity is just one<i> </i>of several factors that direct a regulatory body toward the proper ROE. In this view, during normal economic times, the financial models provide estimates<i> </i>as to the minimum acceptable return, and not necessarily the fair return. The fair return, under this method, typically<i> </i>lies above the cost of equity.</p>
<p>The Wisconsin PSC chose the latter view, explaining that the cost of equity represents the starting point in the ROE analysis, and in most cases does not<i> </i>represent the target rate of return for ratemaking. The PSC said setting the return on equity at the cost of equity, by definition, is a minimalist policy that would allow the utility barely to compete for capital. <i>[See Re Northern States Power Co., Wisconsin, 264 PUR4th 236, No. 4220-UR-115, Jan. 8, 2008 (Wis. P.S.C.).] </i></p>
<h4>Stock Prices and Interest Rates</h4>
<p>Stock prices and interest rates are fundamental inputs in models used in setting ROE awards. Interest rates frequently are cited as a benchmark. The so-called “risk-free rate” readily is observable in the market for government securities. The base rate is identified for the test period under review and a premium above that amount is chosen that represents the increase necessary to cover additional risk associated with stocks and to attract utility stock investors. If rates for government securities are low, many would argue that ROE awards should follow.</p>
<p>Another example of how changes in interest rates might affect ROE awards is found in a recent decision by the California Public Utilities Commission (PUC). In that case, the PUC adopted a new, multi-year cost-of-capital mechanism (CCM) for the major California energy utilities. Under the new plan, the costs of capital used in setting rates for the utility companies—<i>i.e.,</i> costs for long-term debt, preferred stock and common equity—will be set every three years in a full cost-of-capital proceeding. However, changes in interest rates that occur outside of a 100-basis point deadband under a 12-month measurement period would trigger adjustments to the capital cost rates of the utilities. <i>[See Re Southern California Edison Co., 265 PUR 4th 161, D. 08-05-035, (Cal. P.U.C. 2008).]</i></p>
<p>As for stock prices, a review of this year’s rate cases shows the discounted-cash-flow (DCF) method remains the gold standard for financial modeling of utility cost of capital. (Other methods that directly assess the cost of risk-free investments also are used.) The DCF method uses as input the stock prices and dividend payments of companies with comparable risk. The most recent stock price is the one used when calculating dividend yield and growth rates under the DCF. As described in Dr. Roger Morin’s text on utility cost of<i> </i>capital, <i>The New Regulatory Finance: </i></p>
<p>Conceptually, the stock price<i> </i>to employ is the current price of<i> </i>the security at the time of estimating the cost of equity, rather than some historical high-low or weighted average stock price over an arbitrary historical time period. The reason is that the analyst is attempting to determine a utility’s cost of equity in the future, and since current stock prices provide a better indication of expected future prices than any other price …. [t]he most relevant stock price is the most recent one…. Use of<i> </i>any other price violates market<i> </i>efficiency.</p>
<p>In rate cases to come over the next year, the drop in stock prices will have a major effect on the debate. It remains to be seen how the experts and the commissions will explain the role of the models in the process and the hard decisions that must be made to keep utilities financially sound.</p>
<p> </p>
<h4><b>Table Endnotes:</b></h4>
<p class="p2">1.<i> </i> Utility operates under a rate stabilization and equalization (RSE) plan – an alternative rate-making mechanism that provides for periodic automatic adjustments to maintain ROE within a specified range. ROE figure shown is midpoint of approved range.</p>
<p class="p2">2.<i> </i> Order renews existing RSE approved by Order issued 6/10/2002 for period of seven years ending on Dec. 31, 2014.</p>
<p class="p2">3.<i> </i> Includes phase-down of existing cap on ratio of common equity to average capitalization to 57%<i> </i>by Dec. 31, 2008 and to 55% by Dec. 31, 2009.</p>
<p class="p2">4.<i> </i> Produces overall rate of return on “fair value” rate base of 7.03%.</p>
<p class="p2">5.<i> </i> Settlement stated ROE; ROE figure reflects downward adjustment for reduced risk associated with billing determinant adjustment tariff.</p>
<p class="p2">6.<i> </i> Order adopting ratemaking cost of capital for major investor-owned energy utilities.</p>
<p class="p2">7.<i> </i> By subsequent order commission adopts a multi-year cost-of-capital mechanism (CCM) for major utilities. Under CCM, utilities will file applications every third year beginning in April 2010. Changes in interest rates outside of a 100-basis point dead band would trigger off-year adjustments. See <i>Re Southern California Edison Co., 265 PUR4th 161</i> (Cal.P.U.C.2008).</p>
<p class="p2">8.<i> </i> Order determing utility earned $15.5 million in excess of allowed ROE.</p>
<p class="p2">9.<i> </i> Allowed ROE approved March 14, 2007 rate-case decision.</p>
<p class="p2">10.<i> </i> Department finds 10.1% ROE reasonable for current earnings review.</p>
<p class="p2">11.<i> </i> No ROE was specified in the Settlement Agreement. However, in a subsequent filing WGL reported that an ROE of 10% was used to calculate carrying costs.</p>
<p class="p2">12.<i> </i> $98.6 million requested in application, modified to $63 million, to reflect the Hawaii PUC’s decision to separate HECO’s DSM program costs from the rate case to a separate docket.</p>
<p class="p2">13.<i> </i> Order granting application for a determination of advanced ratemaking principles for a proposed wind-generation project.</p>
<p class="p2">14.<i> </i> Result from two most recent dockets involving wind-power projects.</p>
<p class="p2">15.<i> </i> Proceeding to review level of earnings under formula rate plan.</p>
<p class="p2">16.<i> </i> Test year utilized is actual year ending September 30, 2007 with <i>pro formas </i>to June 30, 2009 and Rodemacher Unit No. 3 full year operations.</p>
<p class="p2">17.<i> </i> The components are as follows: Base Rate Increase $250.1 million; Fuel Cost Savings ($224.4) million; Refund of RPS-3 Carrying Charges ($98) million; Net Decrease ($72.3) millions.</p>
<p class="p2">18.<i> </i> Company requested 12.25% ROE.</p>
<p class="p2">19.<i> </i> Order granting requests by two electric utilities for permanent rate recovery of costs associated with damages caused by Hurricanes Rita and Katrina.</p>
<p class="p2">20.<i> </i> Utilities directed to file full ROE analysis reflecting reduced risk associated with “up-front” recovery of future storm costs.</p>
<p class="p2">21.<i> </i> Increase to monthly customer charge for increased operating expense and equipment replacement. Commission also approves “Capital Surcharge” to generate $.546 million over five-year year period to fund capital additions.</p>
<p class="p2">22.<i> </i> Figures shown are total revenue requirement, not revenue sufficiency or deficiency. Approved settlement agreement based on $54.4 million total revenue requirement. Company initially requested rates to recover $56.6 million in revenue.</p>
<p class="p2">23.<i> </i> Order approving stipulation that decreases electric distribution rates and establishes a new five-year alternative rate plan.</p>
<p class="p2">24.<i> </i> ­Rate plan contains a high-end earnings-sharing provision mandating reliability investments if earnings exceed 11% ROE during term of rate plan.</p>
<p class="p2">25.<i> </i> Reflects reduced risk to investors stemming from improvements in capital structure and divestiture of nuclear assets.</p>
<p class="p2">26.<i> </i>Settlement agreement.</p>
<p class="p2">27.<i> </i> Settlement silent on ROE. Utility continues to use ROE authorized in prior rate case.</p>
<p class="p2">28.<i> </i>Demand-side management programs in rate base earn a 5% enhancement on ROE, or 15.6%.</p>
<p class="p2">29.<i> </i> The Tracy combined-cycle generating unit earns a 1.5% incentive ROE, or 12.1%.</p>
<p class="p2">30.<i> </i> Revenues required under three-year rate plan.</p>
<p class="p2">31.<i> </i> Rate order includes earnings-sharing plan allocating 50% of actual earnings above 10.7% ROE to shareholders.</p>
<p class="p2">32.<i> </i> Order establishing three-year rate plan.</p>
<p class="p2">33.<i> </i> Figure shown is levelized annual increase for each of three rate years ending June 30, 2009, 2010 and 2011.</p>
<p class="p2">34<i>. </i>Equity earnings sharing mechanism with 50% sharing of earnings between 10.2% and 11.2%, 7.5% above 11.2%. Figure shown is base figure for revenue requirement.</p>
<p class="p2">35.<i> </i> Commission orders further reduction of $53.924 million for issues not settled under stipulation.</p>
<p class="p2">36.<i> </i>Last rate order issued 2002.</p>
<p class="p2">37.<i> </i>Settlement agreement. ROE not specified.</p>
<p class="p2">38.<i> </i> ROE for natural gas distribution utilities set in accordance with <i>OEB Draft Guidelines on a Formula-Based Return on Common Equity for Regulated Utilities (Ontario Energy Board, March 1997).</i></p>
<p class="p2">39.<i> </i> For electricity rate applications (transmission<i> </i>and distribution) the $ shown as requested and approved are the total revenue requirement, not as revenue sufficiency or deficiency.</p>
<p class="p2">40.<i> </i> ROE for electricity transmitters and distributors set, beginning on 2007 in accordance with the <i>Report of the Board on Cost of Capital and 2nd Generation Incentive Regulation for Ontario’s Electricity Distributors</i>.</p>
<p class="p2">41.<i> </i>Settlement agreement.</p>
<p class="p2">42.<i> </i>Settlement agreement. ROE not specified.</p>
<p class="p2">43.<i> </i><span class="s1"> Application to adjust rates under formula rate plan.</span></p>
<p class="p2">44.<i> </i> Settlement agreement. ROE not specified.</p>
<p class="p2">45.<i> </i> Board approves memorandum of understanding (MOU) as a bottom-line settlement in which overall rate level is found just and reasonable.</p>
<p class="p2">46.<i> </i> Figure shown stated in MOU pending adoption of alternative regulation plan or order in future rate proceeding.</p>
<p class="p2">47.<i> </i> Approved stipulation authorizes stated revenue increase, as well as a four-year, performance-based rate plan.</p>
<p class="p2">48.<i> </i> Plan required company to share with ratepayers earnings in excess of 10.5%.</p>
<p class="p2">49.<i> </i> Subsequently revised to $34 million.</p>
<p class="p2">50.<i> </i> Net of Point Beach nuclear power plant credits. Effective increase for 2009 of $183.5 million net of Point Beach credits.</p>
<p class="p2">51.<i> </i> Offset by a credit of $315.9 million for the sale<i> </i>of the Point Beach Nuclear Power Plant. Credit reduced to $240.7 million in 2009.</p>
</div></div></div><div class="field-collection-container clearfix"><div class="field field-name-field-sidebar field-type-field-collection field-label-above"><div class="field-label">Sidebar:&nbsp;</div><div class="field-items"><div class="field-item even"><div class="field-collection-view clearfix view-mode-full field-collection-view-final"><div class="entity entity-field-collection-item field-collection-item-field-sidebar clearfix">
<div class="content">
<div class="field field-name-field-sidebar-title field-type-text field-label-above"><div class="field-label">Sidebar Title:&nbsp;</div><div class="field-items"><div class="field-item even">ROE Survey Methodology</div></div></div><div class="field field-name-field-sidebar-body field-type-text-long field-label-above"><div class="field-label">Sidebar Body:&nbsp;</div><div class="field-items"><div class="field-item even"><!--smart_paging_autop_filter--><!--smart_paging_filter--><p><span class="s1"><i>Fortnightly’s</i></span> 2008 ROE survey covers cost of equity capital determinations by state public utility commissions during the period Sept. 1, 2007 through Aug. 31, 2008. (A few more recent cases outside the period are provided where available.) <span class="s1"><i>Fortnightly’s</i></span> methodology remains similar to its previous ROE surveys; requests for information on the results of recent rate proceedings were sent to both regulators and utility financial officials. In addition, direct examination of commission rate orders, when available, provided additional information. </p><p class="p1">The traditional cost-of-service rate case remains the primary source of information on how utility regulators view the issue of shareholder earnings requirements. Nevertheless, performance-based rate plans and cases called to conduct periodic earnings reviews also contain findings about the appropriate ROE for utilities, and are reported in this survey. Explanatory notes accompany most entries, and citations are provided for orders published in <a href="http://www.fortnightly.com/public-utilities-reports-fourth-series-pur4th"><span class="s1"><i>Public Utilities Reports, Fourth Series (PUR4th)</i></span></a>.</p></div></div></div> </div>
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</div></div></div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/roe-survey-database-0">ROE Survey &amp; Database</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/rate-cases">Rate Cases</a></li><li class="taxonomy-term-reference-2"><a href="/article-categories/commission-watch">Commission Watch</a></li><li class="taxonomy-term-reference-3"><a href="/article-categories/roe-survey-database">ROE Survey &amp; Database</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/commission-watch">Commission Watch</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/0811/images/0811-cover.jpg" width="1121" height="1500" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/cost">Cost</a><span class="pur_comma">, </span><a href="/tags/demand-side">Demand-side</a><span class="pur_comma">, </span><a href="/tags/demand-side-management-0">Demand-side management</a><span class="pur_comma">, </span><a href="/tags/demand-side-management-programs">Demand-side management programs</a><span class="pur_comma">, </span><a href="/tags/dsm">DSM</a><span class="pur_comma">, </span><a href="/tags/heco">HECO</a><span class="pur_comma">, </span><a href="/tags/nuclear">Nuclear</a><span class="pur_comma">, </span><a href="/tags/regulation">Regulation</a><span class="pur_comma">, </span><a href="/tags/return-0">Return on</a><span class="pur_comma">, </span><a href="/tags/roe">ROE</a><span class="pur_comma">, </span><a href="/tags/rps">RPS</a><span class="pur_comma">, </span><a href="/tags/southern-california-edison">Southern California Edison</a><span class="pur_comma">, </span><a href="/tags/california-public-utilities-commission">California Public Utilities Commission</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/dc">DC</a><span class="pur_comma">, </span><a href="/tags/dcf">DCF</a><span class="pur_comma">, </span><a href="/tags/dividend-yield">dividend yield</a><span class="pur_comma">, </span><a href="/tags/finance">Finance</a><span class="pur_comma">, </span><a href="/tags/new-regulatory-finance">New Regulatory Finance</a><span class="pur_comma">, </span><a href="/tags/ratemaking">Ratemaking</a><span class="pur_comma">, </span><a href="/tags/roger-morin">Roger Morin</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a><span class="pur_comma">, </span><a href="/tags/wisconsin-public-service">Wisconsin Public Service</a> </div>
</div>
Sat, 01 Nov 2008 04:00:00 +0000puradmin13764 at http://www.fortnightly.comThe Need for Nuclear Nowhttp://www.fortnightly.com/fortnightly/2005/02/need-nuclear-now
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>States will play a significant role in the resurgence of nuclear power plants in America.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Joe F. Colvin</p>
</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p><strong>Joe F. Colvin</strong> is president and CEO of the Nuclear Energy Institute.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - February 2005</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>At times, various conditions align and set the stage for achieving goals that may have appeared to be unreachable. Last summer, the Boston Red Sox were all but eliminated from contention, but then won an amazing stretch of baseball games that resulted in a World Series championship.</p>
<p>A similar scenario can be applied to the U.S. nuclear industry-producer of a steady, low-cost, environmentally important electricity source poised to thrive with the possibility of new plant construction in the not-so-distant future.</p>
<p>The National Association of Regulatory Utility Commissioners (NARUC) and state public utility commissions can play a significant role in facilitating the reality of new plant construction-the foundation for economic prosperity and an enhanced quality of life for their states and the nation.</p>
<p>Today, America stands at a crossroads akin to the energy crisis of the early 1970s, when the price of crude oil was at an all-time high and supplies of natural gas appeared to be running short because of price controls.</p>
<p>The country addressed these price and supply risks by investing in new technology and building significant new coal-fired and nuclear capacity. Consequently, nuclear's contributions to U.S. electricity supplies rose from 3 percent in 1973 to 20 percent today, while generation from oil-fueled plants flipped, dropping from 20 percent to 3 percent.</p>
<h4>Same Situation, Different Decade</h4>
<p>The energy landscape today is much the same. The price of crude oil is at, or near, an all-time high. We're placing pressure on natural gas supply and facing the prospect of sustained elevated prices, while meeting new demand through "demand destruction" among industries that use natural gas as a feedstock.</p>
<p>It is imperative that we address today's energy challenges just as we managed the crisis of 30 years ago-by investing in our electricity generation and transmission infrastructure.</p>
<p>The Department of Energy forecasts a 50 percent increase in electricity demand over the next 20 years, which portends a dramatic increase in capital investment in energy infrastructure, including advanced nuclear and coal-fired power plants that represent the backbone of the electricity supply system.</p>
<p>Nuclear and coal power plants represent approximately 70 percent of U.S. electricity supply, but investment in new nuclear and coal-fired power plants has virtually disappeared during the last 12 years. Since Congress enacted the Energy Policy Act of 1992, industry has built 271,000 MW of new gas-fired generating capacity. By contrast, only 4,300 MW of new nuclear capacity and 9,500 MW of new coal-fired capacity have come on line.</p>
<p>The nuclear energy industry is committed to building new nuclear plants, and is working on regulatory, legislative, and financial policy initiatives that permit investment in new reactors. Public support for nuclear energy is at an all-time high, according to an October 2004 nationwide survey of U.S. adults by Bisconti Research Inc. Eight out of 10 Americans believe nuclear energy plays an important role in our energy portfolio today, and more choose nuclear energy as the electricity production fuel for the future than any other source.</p>
<p>Congress in 1992 completely overhauled the federal licensing process for new nuclear power plants, providing an opportunity to obtain all regulatory approvals before significant capital investment is made. As a result, that industry is confident that the new licensing process addresses the tribulations encountered during construction of today's nuclear plants-costly delays and design changes, long construction periods, and cost overruns.</p>
<p>Vision2020, a plan from the Nuclear Energy Institute (NEI), envisions meeting growing energy demand with new reactors early in the next decade. The industry continues to focus on bringing more certainty to capital costs for new reactor designs and on quantifying the business risks associated with new large power plants. NEI expects that the nuclear industry can start building the next generation of plants later this decade.</p>
<p>Regardless of capital cost reductions achieved by the industry, large coal and nuclear power plants share a common challenge. They are capital-intensive technologies with long lead times. Combined-cycle gas plants cost $600/kW to $700/kW and take two to three years to build. Coal and nuclear plants are expected to cost $1,200/kW to $1,400/kW and take four to five years to build. But in the long run, nuclear and clean coal plants are less expensive to operate than gas plants because they provide significant price stability.</p>
<h4>State Support</h4>
<p>The federal government must play a crucial role in providing financial incentives to stimulate investment in new baseload generating technology. But the industry and the federal government cannot rebuild our electricity infrastructure alone. State regulatory commissioners and other state energy officials must participate.</p>
<p>NARUC can help facilitate billions of dollars in private-sector investment by:</p>
<ul>
<li>Providing assurance of investment recovery for projects prudently managed and completed;</li>
</ul>
<ul>
<li>Supporting the creditworthiness of well-managed projects by authorizing long-term power purchases that preserve the consumer's interest in stable prices; and</li>
</ul>
<ul>
<li>Working with the private sector to define and develop innovative approaches to project structure-approaches that apportion risks and rewards equitably between companies and consumers.</li>
</ul>
<p>Several states have developed innovative approaches that need to be recognized. Alabama, Mississippi, and Indiana permit various ways of recovering approved environmental costs. Iowa has legislation in place that permits pre-approval of recoverable construction costs. Wisconsin has enacted new legislation designed to balance the needs of the private sector and consumers, which may serve as a useful model.</p>
<p>Wisconsin Energy (WE) is proposing two new 615-MW, coal-fired power plants under its Power the Future program, backed by the investment protection afforded by the Wisconsin legislation and public service commission (PSC) orders. The new capacity is built and operated by a non-regulated subsidiary, and leased back to its utility affiliate, We Energies.</p>
<p>During construction, the unregulated company will receive a return on capital invested in the project equivalent to the weighted cost of capital, with lease payments recovered by We Energies through ratemaking. Once the Wisconsin PSC agrees to a lease payment, the payment cannot change for the life of the lease, and the lease payments are fully recoverable through customer rates. Further, because the PSC has responsibility for reviewing capital costs, ratepayers are protected from cost overruns.</p>
<p>These state actions are evidence of how cooperative engagement by public officials on such vital public policy issues can serve the national interest. The NEI hopes other states can work with the industry to develop similar approaches suited to their particular needs.</p>
<p>Someone once wrote that "ill-fortune is the failure to anticipate." In too many circumstances throughout history, the failure to take responsibility for confronting serious issues when they're most manageable proves far more costly in the long run. As we look ahead to the next two decades, it's clear that America must take decisive action now to secure our energy future.</p>
<h4>Essential Asset</h4>
<p>Over the next two decades, it's going to take a concerted effort to make sure America has the electricity it needs from a diverse group of energy sources to support a growing economy and meet its environmental goals.</p>
<p>The nuclear energy sector has a strong foundation on which to build. Our 103 nuclear power plants supply electricity to one in every five U.S. homes and businesses. These plants are a strategic national asset because nuclear power is the only expandable, large-scale energy source that is emission-free and can meet the baseload electricity demands of our growing population and economy. Emission-free nuclear plants play a vital role in meeting our clean air goals and the president's commitment toward reducing the greenhouse gas intensity of the U.S. economy.</p>
<p>Nuclear plants are operating safely at extremely high levels of efficiency, with industry-wide annual capacity factors in the 90-percent range. Nuclear power plants are low-cost producers, running on average between $20/MWh and $25/MWh, and they contribute to the fuel and technology diversity that is the strength of the U.S. electric supply system.</p>
<p>Nuclear power plants are a strategic national asset that justifies a systematic, disciplined program to build new nuclear power plants in the years ahead. It would be impossible for the United States to have a coherent, forward-looking energy policy without nuclear energy, and state regulators have a vital role to play as the industry considers building new nuclear power plants.</p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/states">The States</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/nuclear">Nuclear</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/perspective">Perspective</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/0502-PER-Colvin.jpg" width="584" height="827" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
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<a href="/tags/bisconti-research-inc">Bisconti Research Inc.</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/congress">Congress</a><span class="pur_comma">, </span><a href="/tags/department-energy">Department of Energy</a><span class="pur_comma">, </span><a href="/tags/electricity-infrastructure">electricity infrastructure</a><span class="pur_comma">, </span><a href="/tags/energy-policy-act">Energy Policy Act</a><span class="pur_comma">, </span><a href="/tags/energy-policy-act-1992">Energy Policy Act of 1992</a><span class="pur_comma">, </span><a href="/tags/naruc">NARUC</a><span class="pur_comma">, </span><a href="/tags/national-association-regulatory-utility-commissioners">National Association of Regulatory Utility Commissioners</a><span class="pur_comma">, </span><a href="/tags/nei">NEI</a><span class="pur_comma">, </span><a href="/tags/nuclear">Nuclear</a><span class="pur_comma">, </span><a href="/tags/nuclear-energy-institute">Nuclear Energy Institute</a><span class="pur_comma">, </span><a href="/tags/nuclear-energy-institute-nei">Nuclear Energy Institute (NEI)</a><span class="pur_comma">, </span><a href="/tags/nuclear-power">Nuclear power</a><span class="pur_comma">, </span><a href="/tags/nuclear-power-plants">Nuclear power plants</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a> </div>
</div>
Tue, 01 Feb 2005 05:00:00 +0000puradmin10843 at http://www.fortnightly.comPerspectivehttp://www.fortnightly.com/fortnightly/2004/03/perspective
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Wisconsinites don&#039;t fear &#039;Day 2.&#039; But let&#039;s get the grid rights right.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Robert M. Garvin</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - March 2004</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 class="dept">Perspective</h1>
<h3>Wisconsinites don't fear 'Day 2.' But let's get the grid rights right.</h3>
</p>
<p>While working for the Wisconsin Public Service Commission (PSC), I have grown accustomed to the friendly advice frequently offered by regulatory colleagues and utility executives in higher-cost areas to the East. The latest of their suggestions on how to best develop efficient, transparent, robust bulk power markets in the Midwest comes from Scott Miller of the PJM Interconnection LLC (see "Reliability and Markets: Two Sides of the Same Coin," , January 2004), who says critics of the big-bang approach to market development from the Midwest Independent Transmission System Operator Inc. (MISO) are guilty of forcing a "false choice" between reliability and markets.</p>
<p>But the skepticism over MISO's proposal to implement its Day 2 market design-a real-time, day-ahead energy and financial transmission market (a proposal that MISO later agreed to postpone)-across its scattered footprint had very little to do with the false choice suggested by Mr. Miller, and everything to do with potential diminution of the economic value of existing transmission service and future wholesale market activity, especially in load pockets like Wisconsin. These fundamental economic concerns were outlined by stakeholders across the MISO footprint over the glaring omissions in MISO's hastily filed energy markets tariff based on locational marginal pricing (LMP).<sup>1</sup></p>
<p>It would be ironic indeed to characterize as "opponents of restructuring" the MISO stakeholders like the Wisconsin PSC, which actively supported MISO's decision to withdraw its energy markets tariff last October. Since MISO's inception, Wisconsin regulators have consistently supported our utilities' membership in MISO and MISO's decision to develop competitive bulk power markets in the Upper Midwest.<sup>2</sup> As a net importer of electricity, Wisconsin stands to benefit greatly from a reliable, open-access transmission system that provides greater access to regional energy markets for our load-serving entities (LSEs). Wisconsin, therefore, has been and will continue to be, a strong proponent of markets and market reforms that will provide near- and long-term benefits to Wisconsin consumers that are commensurate with additional costs.</p>
<h3>A False Choice</h3>
<p>The belief that the MISO tariff advocates a false choice between reliability and markets is based on a fundamentally flawed assumption that MISO would have been able to file a tariff and successfully implement new LMP-based markets by April 2004. This critique strives to avoid any discussion of the demonstrable gaps in the incomplete tariff that formed the basis for the MISO board of directors' decision to support withdrawal last fall. The board's decision reflects a good measure of Midwest common sense and the realization that MISO's piecemeal approach to market implementation could not garner broad stakeholder support.</p>
<p>I have never considered reliability and wholesale market development to be mutually exclusive. We can all agree that reliability and commercial efficiency are not only compatible, but mutually reinforcing, and that reliability and markets are two sides of the same coin. The trouble is that the commercial efficiencies that reinforce reliability can be obtained only through a well-developed market tariff and implementation plan.</p>
<p>Hastily planned and executed market implementation can threaten reliability. The Wisconsin PSC and a number of interested LSEs filed comments critical of MISO's July 25, 2003, tariff filing because it reflected MISO's rush to meet market implementation deadlines instead of a market implementation approach that would enhance reliability.<sup>3</sup> To the extent MISO's proposed tariff, as filed July 25, 2003, presented a choice between reliability and markets, the choice was not false.</p>
<p>I still believe it is appropriate to consider the economic losses from events like the Aug. 14, 2003, blackout as potential offsets to gains from new markets, especially given the hurried, piecemeal market implementation approach that MISO was taking. In contrast, Mr. Miller carries his implicit assumption about MISO's market readiness so far as to suggest that LMP in the MISO footprint could have prevented the Aug. 14 blackout.<sup>4</sup></p>
<h3>Gaps in the Tariff</h3>
<p>The most critical missing element in MISO's withdrawn tariff concerns the allocation of financial transmission rights (FTRs). It is difficult to understate either the priority or magnitude that Wisconsin stakeholders have placed on developing an FTR allocation process at MISO that fully hedges Wisconsin LSEs for a significant portion of their intermediate and baseload resources in a day-ahead energy market.</p>
<p>As the Federal Energy Regulatory Commission (FERC) and most PJM market participants would agree, the allocation of FTRs is of paramount importance, especially in areas with persistent load pockets like Wisconsin and the Upper Peninsula of Michigan.<sup>5</sup></p>
<p>The Wisconsin-Upper Michigan System (WUMS) frequently is described as the most constrained portion of the MISO footprint and one of the most congested transmission systems in the United States.<sup>6</sup></p>
<p>Mr. Miller describes the LMP-based market concept as "simple and elegant" because it "in effect 'pays' the utilities and traders to monitor the condition of the grid with every transaction."</p>
<p>Many prominent academics might opine that equity and efficiency require that MISO's FTR allocation leaves Wisconsin short on its FTRs as the financial hedges against congestion costs. As a matter of public policy, however, implementing LMP-based congestion management in load pockets like Wisconsin is neither simple nor elegant. MISO stakeholders have reviewed a variety of FTR allocations that have not provided LSEs with a sufficient level of confidence that their customers will not be paying more for their existing uses of the transmission system under MISO's Day 2 market design. Unless FTRs provide a full financial hedge, the risk of higher congestion costs is real. In the absence of any meaningful protection, Wisconsin faces the prospect of bearing substantially higher transmission costs than exist today during the initial phase of the MISO's Day 2 market.</p>
<p>FERC has made bold "hold harmless" promises to the states on the issue of FTRs. In its ,<sup>7</sup> FERC provides the following assurances:</p>
<p>If an RTO or ISO uses location pricing, it must ensure that each existing firm customer (including transmission owners with a service obligation for native load) has the opportunity to obtain FTRs equivalent to that customer's existing firm rights. We will ensure not only that existing customers retain their existing rights but also that they have the ability to obtain rights for future load growth.<sup>8</sup></p>
<p>The white paper's promise on the subject of FTRs was, in my view, an effort to ensure those on the fence that our federal brethren would not force low-cost states like Wisconsin to pay more for their existing transmission under any standard market design (SMD) proposal that relied on LMP as the primary congestion management tool. The demise of FERC's SMD rulemaking<sup>9</sup> has not diminished the interest of those who want to keep FERC's and MISO's feet to the fire when it comes to ensuring that LSEs receive FTRs equivalent to the firm transmission rights they enjoy today. Implementing LMP in load pockets like Wisconsin without that assurance likely would be economically harmful to our LSEs and their customers.</p>
<p>How will MISO implement significant aspects of its market plans while maintaining fidelity to the principles described in FERC's white paper and its Feb. 24, 2003, order, with respect to the appropriate allocation of FTRs?<sup>10</sup> Resolution of this issue will drive future stakeholder support for MISO's efforts, as well as any effort to expand MISO membership in its western footprint.</p>
<p>Apart from the concerns over FTRs, Wisconsin regulators and utilities also recognize our congested transmission system cannot be wished away. Wisconsin utilities are working together to alleviate transmission constraints through new construction and improved local transmission operations. Wisconsin's stand-alone transmission company, American Transmission Co. LLC (ATC),<sup>11</sup> plans to roughly quadruple its rate-base transmission assets over the next decade. The Wisconsin PSC recently approved a new 345-kV line that could, once it is placed in service in 2008, nearly double Wisconsin's import capability.<sup>12</sup> These planned transmission upgrades will not, however, provide any meaningful benefit before the currently scheduled Dec. 1, 2004, start-up date of MISO's Day 2 markets.</p>
<p>Wisconsin utilities also are examining other ways to improve the efficiency of congestion management prior to the introduction of an LMP model. ATC not only has improved local congestion management, but it makes congestion costs explicit to its members. Making congestion costs explicit sends cost signals to Wisconsin utilities and improves their grid operations to minimize these costs. Wisconsin's LSEs and ATC are constructing billions of dollars of new generation close to load, as well as planning billions of dollars of new transmission infrastructure that will reduce congestion in and around Wisconsin and expand the accessibility of MISO's regional markets.<sup>13</sup> Wisconsin is making the correct infrastructure investment decisions prior to the introduction of LMP-driven price signals.</p>
<h3>Other Missing Parts in the Tariff &amp; Seams</h3>
<p>Since withdrawing the tariff, MISO has acknowledged a great deal more work is needed to be done before it could start up a real-time or day-ahead energy market. In addition to the missing provisions related to FTR allocations, the proposed tariff left out several other crucial elements needed to gain stakeholder support.<sup>14</sup> MISO identified "a list of gaps in the tariff and unresolved, market design issues that required policy direction from stakeholders.<sup>15</sup> For example, MISO identified 24 market design issues that will require more stakeholder work, including broad issues like "offer cap and scarcity pricing," "resource adequacy commitment (RAC) process," and "day-ahead market timeline." Additionally, stakeholder groups are working on delineating control area roles and responsibilities.<sup>16</sup></p>
<p>Wisconsinites know Swiss cheese when we see it. Significant seams exist between MISO and non-MISO members throughout the MISO footprint, and I remain concerned not only about the existing seams to our south resulting from Commonwealth Edison's decision to join PJM, but also the potential for a large number of unresolved seams issues between jurisdictional and non-jurisdictional utilities in the Mid-Continent Area Power Pool (MAPP) region. In the absence of any federal regulatory action to compel non-MISO MAPP utilities to join MISO, these seams issues could exist regardless of the timing of market implementation in the western portions of the MISO region.</p>
<p>MISO's business plan is very ambitious in the scope of what it plans to accomplish over a relatively brief period of time. A number of MAPP utilities have expressed both reliability and financial concerns about joining MISO under the present circumstances. Some have suggested that MISO consider alternative market implementation plans. Some non-MISO members of MAPP have very granular and reliable state estimators that took several years to develop. While MISO has made excellent progress in developing grid monitoring tools, including a state estimator model, it was not until January 2004 that MISO deemed its state estimator to be "production grade" and used it for real-time operations.<sup>17</sup></p>
<p>MISO needs to provide greater assurance to stakeholders in Wisconsin [which is split between the MAPP and the Mid-America Interconnected Network (MAIN) reliability councils] as well as to other MAPP utilities that they will not be worse off under MISO's Day 2 market design. This is significant for Wisconsin because the MAPP system is Wisconsin's only direct interconnection to the rest of MISO.</p>
<p>How MISO addresses these difficult tariff and seams issues will determine the ongoing level of stakeholder acceptance of MISO's market initiative in many parts of the Midwest. The cost of rushing into poorly designed LMP-based energy markets may far exceed any purported cost increases attributable to any future delayed start-up date for certain portions of the MISO region. One need not have attended law school to understand the significant risk of litigation for pursuing a Day 2 market that is not acceptable to a large number of MAPP members.</p>
<p>I hope industry observers will recognize that many of us in the Midwest believe in robust wholesale markets and in regional transmission organizations. Every region, however, should be allowed to fashion market implementation plans that will most effectively achieve those objectives. It was the practical, and not the theoretical considerations that compelled a large majority of MISO stakeholders to support MISO's tariff withdrawal last October. And it will be practical solutions that ensure MISO's success.</p>
<p><b><i class="endnote">Endnotes</i></b></p>
<ol>
<li>FERC .</li>
<li>Through state legislation passed in 1999, Wisconsin was one of the few states in the country that required its transmission owners to join the MISO. Wisconsin also unbundled transmission service and later enacted laws authorizing the divestiture of transmission facilities.</li>
<li>See Comments of the Public Service Commission of Wisconsin, FERC , filed Aug. 27, 2003.</li>
<li>Mr. Miller's lack of stated appreciation for MISO's lack of market-readiness before Aug. 14, 2003 runs even deeper. His analysis ignores the lingering "Day 1" problems that MISO faced last October. Many of these issues were rolled into MISO's new Reliability Charter, which MISO claims is largely responsible for the roughly $40 million cost of market delay.</li>
<li>In fact, FERC is investigating the degree of transmission congestion on the Delmarva Peninsula and the associated LMP implications. FERC .</li>
<li>See U.S. Department of Energy, National Transmission Grid Study: Issue Papers, May 2002.</li>
<li>FERC, White Paper on Wholesale Power Markets Platform, available at <a href="http://www.ferc.gov/industries/electric./indus-act/smd/white_paper.pdf" target="_blank">http://www.ferc.gov/industries/electric./indus-act/smd/white_paper.pdf</a></li>
<li>See white paper, Appendix A, pp. 7-8. Also, in its white paper FERC stated that in its final SMD rule, FTRs "would be allocated according to existing contracts and existing service arrangements in order to hold customers harmless." See p. 10.</li>
<li>FERC .</li>
<li>See Order on Petition for Declaratory Order, FERC , issued Feb. 24, 2003. In its order to MISO, with respect to MISO's initial FTR allocation, FERC places a higher priority on holding "existing transmission customers whole with respect to congestion-related charges under MISO Day-2 operation to the extent possible given the objective of simultaneous feasibility" than on MISO's other objectives for its FTR allocation.</li>
<li>ATC was created under state law to address our state's historic underinvestment in transmission. ATC plans to construct almost $3 billion in new transmission projects in Wisconsin over the next decade.</li>
<li>Wisconsin PSC .</li>
<li>The PSCW recently authorized the construction of approximately 2,500 MW of coal-fired baseload and natural gas-fired intermediate generation facilities at existing plant locations near load. PSCW .</li>
<li>MISO's "Market Subcommittee Energy Markets Tariff Issues Update" to the MISO Advisory Committee, Jan. 14, 2004.</li>
<li>The identified "gaps" include market mitigation measures; initial FTR allocation and nomination methodology; system support resources agreement and compensation; marginal losses crediting mechanism; and creditworthiness provisions.</li>
<li>At the Jan. 14, 2004, MISO Advisory Committee meeting, stakeholders reported that they will not work on control area consolidation issues until after they resolve issues related to roles and responsibilities. The Aug. 14, 2003, blackout has amplified concerns in Wisconsin and elsewhere in the MAPP region over the feasibility of centralized control of the entire MISO footprint. Some MAPP members and other Wisconsin utilities are concerned that MISO's central control does not properly recognize the differences in the multiple control areas in its footprint. To the best of my knowledge, other RTOs that operate with single control areas did not face such challenges during market implementation.</li>
<li>This leads to another question that Mr. Miller did not address when expressing his concern for MISO's tariff withdrawal: Would MISO's grid monitoring tools have been sufficiently developed and tested in time for a March 2004 LMP-based market start-up? Even Mr. Miller concedes that for LMP-based markets to enhance reliability, the price must reflect "the actual physical state of the grid." He describes that condition as the "kicker." An LMP-based market start-up only weeks after the necessary grid monitoring tools are operationally proficient could have been quite a "kicker" as well as a "screamer"!</li>
</ol>
<hr />
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<div class="field-label">Tags:&nbsp;</div>
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<a href="/tags/american-transmission">American Transmission</a><span class="pur_comma">, </span><a href="/tags/american-transmission-co">American Transmission Co.</a><span class="pur_comma">, </span><a href="/tags/atc">ATC</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/department-energy">Department of Energy</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission-ferc">Federal Energy Regulatory Commission (FERC)</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/interconnection">Interconnection</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/lmp">LMP</a><span class="pur_comma">, </span><a href="/tags/lse">LSE</a><span class="pur_comma">, </span><a href="/tags/midwest-independent-transmission-system-operator">Midwest Independent Transmission System Operator</a><span class="pur_comma">, </span><a href="/tags/miso">MISO</a><span class="pur_comma">, </span><a href="/tags/network">Network</a><span class="pur_comma">, </span><a href="/tags/pjm">PJM</a><span class="pur_comma">, </span><a href="/tags/pjm-interconnection">PJM Interconnection</a><span class="pur_comma">, </span><a href="/tags/public-service-commission-wisconsin">Public Service Commission of Wisconsin</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/rto">RTO</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a><span class="pur_comma">, </span><a href="/tags/us-department-energy">U.S. Department of Energy</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a><span class="pur_comma">, </span><a href="/tags/wisconsin-public-service">Wisconsin Public Service</a> </div>
</div>
Mon, 01 Mar 2004 05:00:00 +0000puradmin11002 at http://www.fortnightly.comPeoplehttp://www.fortnightly.com/fortnightly/2002/06/people
<div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - June 1 2002</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><p><center> <center> </center> <br />
<p align="left"> Former U.S. Senator <b>Slade Gorton</b> has joined the board of directors of the Electricity Innovation Institute (E2I). E2I also named current board members to serve as chairperson, and Linda Stuntz to serve as vice chair. </p>
<p align="left">The National Hydropower Association presented Senator <b>Larry Craig</b> (R-ID) with its Legislator of the Year award for his efforts to achieve effective and fair hydropower legislation. </p>
<p align="left">The New York Power Authority honored <b>Shalom Zelingher</b>, director, and <b>Misak Krikorian</b>, senior engineer, of the research and technology development unit of NYPA, for their leadership in the development of a device for detecting problems in hydroelectric power generators. The device, named the HydroTrac, was developed under the auspices of the Electric Power Research Institute (EPRI). Zelingher and Krikorian also received the 2001 Technology Transfer Award from EPRI for their work on the project. </p>
<p align="left">EPRI appointed <b>Clark W. Gellings</b> to the position of vice president of power delivery and utilization sector. Gellings joined EPRI in1982 and succeeds <b>Dr. Karl Stahikopf</b>, who has accepted a senior management position with Hawaiian Electric Company (HECO), an EPRI member utility. </p>
<p align="left"><b>Victor H. Ransom</b> was appointed by the NRC to its independent advisory committee on reactor safeguards. Dr. Ransom is retired from the Purdue University School of Nuclear Engineering. </p>
<p align="left">Former FERC commissioner <b>Matthew Holden Jr.</b> has retired as the Henry L. and Grace M. Doherty Professor of Politics at the University of Virginia, where he has been a faculty member since 1981. His post-retirement plans include continuing his studies in the inter-penetration of politics and economics, especially in the reorganization of the electric power industry, as well as a book on regulatory policy and practice from the perspective of a former FERC and Wisconsin PSC commissioner. </p>
<p align="left">Conoco and Phillips Petroleum announced the following management changes that will take place after their proposed merger. <b>James J. Mulva</b>, current chairman and CEO of Phillips will become president and CEO of ConocoPhillips. <b>Philip L. Frederickson</b>, senior vice president of corporate strategy and business development for Conoco, will become executive vice president, commercial. <b>Gene L. Batchelder</b>, vice president and CIO for Phillips, will become senior vice president and CIO. <b>Thomas C. Knudson</b>, vice president of human resources, information management, and corporate communications for Conoco will become senior vice president of government affairs and communications. <b>Joseph C. High</b>, vice president of human resources and services for Phillips, will become vice president of human resources. <b>Robert A. Ridge</b>, vice president of health, environment, and safety for Phillips will continue in that role in the new company. <b>Rob McKee</b>, executive vice president exploration and production for Conoco will become executive vice president E&amp;P. <b>Jim Nokes</b>, executive vice president of refining, marketing, supply, and transportation for Conoco, will continue in this position in the new company. <b>John A. Carrig</b>, senior vice president and CFO for Phillips, will become executive vice president of finance and CFO. <b>Rick Harrington</b>, senior vice president, legal, and general counsel for Conoco, will continue in this position in the new company. </p>
<p align="left"><b>Gay Friedman</b>, senior vice president for legislative affairs and secretary of the Interstate Natural Gas Association of America (INGAA), announced her retirement after 11 years with the association. The current director of legislative affairs, <b>Martin E. Edwards III</b>, has been named her successor. </p>
<p align="left">The Midwest Independent Transmission System Operator (MISO) named <b>Alex J. DeBoissiere</b> to the position of vice president, chief regulator and legislative officer. He will manage MISO's federal activities from the company's newly formed Washington, D.C. office. </p>
<p align="left">ExxonMobil Gas Marketing Company has announced three senior management appointments. <b>Roberta A. Luxbacher </b>will become director, Europe Gas Marketing, for ExxonMobil International Ltd. <b>J.J. Kelly</b> will become vice president, Americas, EMGMC. And <b>William M. Colton</b> will become vice president, Asia Pacific, EMGMC. Luxbacher joined Exxon in 1978 as a sales associate. Kelly joined Mobil in 1980. Colton joined Exxon in 1975 as a project manager. </p>
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Sat, 01 Jun 2002 04:00:00 +0000puradmin11443 at http://www.fortnightly.comNews Digesthttp://www.fortnightly.com/fortnightly/2001/01/news-digest
<div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Calif. PUC Application 99-08-022, proposed decisions by Barnett (Aug. 2, 2000), Neeper (Sept. 19, 2000), and Bilas (Nov. 6, 2000)</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - January 1 2001</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 align="center"> </h1>
<h1 align="center">News Digest</h1>
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<h2>State PUCs </h2>
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<p align="left"> <b>Retail Marketing Credits.</b> As the Federal Energy Regulatory Commission pondered remedies for volatility in California's wholesale power markets, the state PUC was considering how much the state's three major investor-owned electric distribution utilities (UDCs) must spend on power supply procurement and retail marketing for the benefit of their standard-offer default customers, and thus how much to add to the "PX Credit" that is subtracted from bundled rates to determine the wires-only charge that UDCs assess to customers that choose a competitive retailer for generation supply. </p>
<p align="left">As of late November, three proposed decisions were pending before the full commission, one issued by Administrative Law Judge Robert Barnett (with lower credits more favorable to UDCs), two more issued by Commissioners Josiah Neeper and Richard A. Bilas (with credits as much as five times higher, and thus more favorable to competitive retailers). Each decision would assess credits higher than proposed by the three UDCs-Pacific Gas &amp; Electric (PG&amp;E), Southern California Edison (SCE), and San Diego Gas &amp; Electric (SDG&amp;E)-but lower than suggested by the Office of Ratepayer Advocates (ORA) or the Alliance for Retail Markets (ARM)....</p>
<p align="left">The UDCs proposed low credits, claiming that their obligation to serve as supplier of last resort made it impossible for them to avoid a significant amount of marketing or power procurement costs. But Commissioner Neeper warned against that view: "It is not correct to assume that the utilities' default provider status will always be required, and thus that certain procurement costs are in the long run unavoidable." . </p>
<p align="left"><b>Distributed Generation.</b> In updating its current rules, New York barred electric utilities from requiring any sort of insurance coverage as a condition for interconnection by electric customers of distributed generation facilities of 300 kilovolt-amperes or less. </p>
<p align="left">Instead, the commission will leave it up to private markets to craft insurance arrangements for small-scale generators that install DG plants. </p>
<p align="left">The commission also will allow customers to lease their on-site DG units to third parties, and will not limit the standard interconnection contract to a specific term (e.g., five years), despite hard lessons learned from cogeneration contracts that locked in rates at out-of-market levels. </p>
<p align="left">"Standardized [DG] contracts do not include payments for energy," said the commission. "It is not unreasonable for us to require utilities to enter into interconnection agreements that last for the lifetime of the DG unit." . </p>
<p align="left"><b>On-Site Solar.</b> By contrast to New York (see above), Florida will require proof of liability insurance no less than $100,000 before allowing electric customers to interconnect photovoltaic generating systems smaller than 10 kilowatts under a pilot program with Tampa Electric. </p>
<p align="left">The utility will pay customers 9 cents per kilowatt-hour for their solar generation, or 1 cent less than the premium price for the solar-generated power under a "green" energy program OK'd for Tampa Electric back in September. . </p>
<p align="left"><b>Electronic Data Interchange.</b> New York invited comments on proposals offered on Oct. 10 by the state's EDI Collaborative for using Electronic Data Interchange in business processes for enrolling and removing retail direct access customers. . </p>
<p align="left"><b>Performance-Based Rates.</b> Rejecting arguments from power producers, industrial customers, and the state's public advocate, Maine found no need to incorporate a mechanism to share excess earnings with ratepayers in approving a seven-year, performance-based, price index formula to set rates for electric transmission and distribution for Central Maine Power. </p>
<p align="left">Instead, the PUC set a high productivity figure as an offset to the inflation adjustment allowed under the formula. The offset will equal the inflation rate in 2001, and rise from 2 percent to 2.9 percent by 2007-nearly double the offsets proposed initially by CMP.. </p>
<p align="left"><b>Standard Offer Entry/Exit Fees.</b> Maine opened an investigation of entry or exit fees for standard offer power supply service, citing "gaming" threats posed by customers who switch back and forth between competitive and SO services. The PUC posed several questions for comment, such as: </p>
<ul>
<li> Cause of Gaming. Should the rule address only those problems that stem from market price fluctuations, or should it consider problems that stem from ratemaking formulas used in calculating SO rates? </li>
<li> Type of Fee. Require an "opt-out" fee (payable if a customers leaves SO service too soon), or instead charge an "entrance" fee on return to SO service? </li>
<li> Revenue Allocation. How to apportion revenues from opt-out fees if the identity of the SO provider changes between the time a customer signs up and later leaves? </li>
<li> Aggregation Deals. How to handle the case when customers enroll in SO service as an aggregated group, but then leave SO service individually? . </li>
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<h2>Studies &amp; Reports</h2>
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<p> <b>Transition to Deregulation. </b>The "prolonged and muddled transition" from regulation to market control of the North American electric power industry, including recent highly publicized brownouts and volatile prices, has raised public concerns about the industry's ability to deliver reliable service at affordable costs, according to a report by Cambridge Energy Research Associates and Arthur Andersen. </p>
<p>The report, "Electric Power Trends 2001," says that potential consequences of the transition difficulties include the likelihood of renewed political intervention and re-regulation that could worsen transmission gridlock and increase the industry's valuation gap. Contact Lauren Laidlaw at 617-441-2604 or <a href="mailto:llaidlaw@cera.com">llaidlaw@cera.com</a>. </p>
<p><b>Wisconsin Power Markets.</b> Power producers may well be able to exercise market power in Wisconsin (especially in northern Wisconsin and Upper Michigan), thereby frustrating development of retail electricity competition in the state, even after new transmission capacity is added, according to a study commissioned by the Wisconsin PSC and conducted by the consulting firm of Tabors, Caramanis and Associates of Cambridge, Mass. </p>
<p>Yet the report adds that a workably competitive market would not produce stranded costs or adverse effects on employees at generating facilities, but would lead to "significantly lower rates." </p>
<p>The authors suggest two remedies: (1) Require Wisconsin Electric Power Co. to divest its generation assets among three separate independent owners, and (2) force plant owners to dedicate a significant portion of their capacity to fixed price contracts for retail customers taking standard offer service. . -L.A.B., P.C. </p>
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<p align="left"><b>Gas Franchise Forfeiture.</b> North Carolina opened an inquiry on whether Frontier Energy LLC has made enough progress to initiate gas distribution service in newly certificated and previously unserved areas to avoid forfeiture of its franchise for lack of service. . </p>
<p align="left"><b>Gas System Outages.</b> Citing potential harm to customers, Wyoming declined to fine K N Energy for a "series of preventable human errors" that regulators said had represented "grossly negligent and unjustifiable conduct" and had led to a total failure of the utility's retail gas distribution network for some 10,000 retail customers (business and residential) in the city of Laramie, back on July 18. Instead, the commission told K N to make improvements and supply numerous followup reports, and denied rate recovery of expenses incurred by the company (about $317,000) to shut down and relight the system during the emergency. . </p>
<p align="left"><b>QF Cost Recovery.</b> Montana denied a request by Montana Power Co. to boost the generation component of rates to recover higher purchased power prices paid to qualifying cogeneration facilities, saying the utility failed to make the requisite showing of "irreparable financial harm," as required to earn an exception from the rate moratorium imposed under the state's electric restructuring legislation that froze rates to levels in place on July 1, 1998. . L.A.B. </p>
<p align="left"><b>Public Benefits Programs.</b> New Hampshire issued instructions for designing, evaluating, and funding public purpose programs for electric utilities and customers: </p>
<ul>
<li> Low-Income Assistance. Rejected a flat rate discount in favor of fluctuating payments designed to cut electric bills to 6 percent and 4 percent of income, respectively, for heating and non-heating customers. . </li>
<li> Energy Efficiency. OK'd a cost-benefit test with a 15 percent adder for nonquantifiable environmental benefits, and told electric utilities to develop PAYS programs ("Pay As You Save"), with program funding costs repaid out of bill savings, so as to eliminate up-front costs or split incentives. . </li>
<li> System Benefits Charge. Allocated revenues from the 2-mill system benefit charge on a 60-40 basis between two types of public benefit programs-i.e., $0.0012 per kilowatt-hour for low-income assistance, and $0.0008 per kilowatt-hour for energy/conservation programs. . </li>
</ul>
<p align="left"><b>Single-Retailer Tariff.</b> New York OK'd a single-retailer natural gas tariff for Rochester Gas &amp; Elec. Corp., whereby RG&amp;E will act as a wholesaler only, providing distribution service at wholesale to unregulated retail marketers, who in turn will repackage the distribution service with the gas commodity to retail gas customers, who will look to the unregulated marketer for all billing and merchant functions. . </p>
<p align="left"><b>Securitization Bonds.</b> Regulators in Michigan and Connecticut authorized Detroit Edison, Consumers Energy, and Connecticut Light &amp; Power to issue bonds to securitize stranded and regulatory assets. </p>
<ul>
<li> OK's bonds to finance $1.8 billion of regulatory assets, with a surcharge of $0.004239 per kilowatt-hour to recover the assets. . </li>
<li> OK's bonds to finance $468.5 million in regulatory assets, with finance surcharge of $0.0025 per kilowatt-hour to recover the assets. . </li>
<li> OK's rate reduction bonds to securitize some $1.5 billion in regulatory and stranded assets. . L.A.B. </li>
</ul>
<p align="left"><b>Stranded Costs.</b> In an open meeting held Nov. 1, the Texas PUC suggested that electric utility ratepayers should be allowed to benefit in some way if electric utilities in the state might end up with "negative" stranded costs (assets worth more than book value), even though state law does not allow for calculation of such negative balances, and asked its staff to produce a final order to deal with the possibility. </p>
<p align="left">With recent price runups in natural gas and wholesale power markets, the PUC predicted a higher-than-expected value for nuclear generation owned by utilities. It questioned whether it would have to "undo" various mitigation measures it had adopted earlier (e.g., allowing accelerated depreciation on power plants liable to stranding). P.C. </p>
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<h2>Electric Reliability</h2>
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<p> <b>Mandatory Federal Standards.</b> Acknowledging failure in trying to get Congress to pass federal legislation, the Department of Energy asked for comments on whether it should open its own rulemaking case to compel the Federal Energy Regulatory Commission to impose mandatory standards for electric reliability. The DOE asked for comments on several questions, including: </p>
<ul>
<li> Current Rules. What's wrong with the current system, and have violations of standards jeopardized reliability? </li>
<li> FERC Authority. What can the FERC do under current authority? Can it impose standards or delegate that task to a separate, self-regulating, reliability organization (SRRO)? </li>
<li> RTO Issues. How would regional transmission organizations interact with an SRRO? . </li>
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<p><b>NERC 10-Year Assessment.</b> The North American Electric Reliability Council (NERC) released its reliability assessment for the years 2000-2009, predicting a sharp turnaround in availability of generation supply, with higher summer reserve margins by 2004 in most of the country-in the Eastern and Western Interconnections, but not in ERCOT, where NERC projects that margins will rise slightly through 2002, but then begin to fall. Consistent with that prediction, NERC projects greater growth in demand and load in the ERCOT than in the West or East. The study also reveals a sharply higher incidence nationwide of requests for transmission line loading relief (TLR), beginning in April 2000, and continuing through the remainder of the year at a much higher plateau than in prior years. </p>
<ul>
<li> Study projects 1.9 percent annual growth nationwide in both electric demand and load, but stronger rates in the West (2.1 percent increase) and ERCOT (2.7 percent) than in the East (1.7 percent). </li>
<li> Increasing through 2004, especially in the Northeast (NPCC) and the Mid-Atlantic (MAAC), and to a lesser degree in Florida (FRCC) and the West (WSCC), but flat or falling slightly during the same time frame in the Midwest (ECAR and MAPP), and the South- east (SERC). Margins are projected at dangerously low levels in Texas (ERCOT) by 2009, based on announced construction plans for new merchant generation. </li>
<li> TLR logs show a steady growth in requests for line relief since 1997, plus an approximate tripling of TLR events from 1999 to 2000 during almost all months. </li>
<li> NERC projects that production of natural gas in the Western Canadian Sedimentary Basin (and Canadian exports to the United States) will remain roughly constant through about 2012, when each will begin to fall, with WCSB production unable to fill export pipeline capacity by 2018. See <a href="http://www.nerc.com/~filez/rasreports.html">www.nerc.com/~filez/rasreports.html</a>. </li>
</ul>
<p><b>Michigan Grid Constraints. </b>The Michigan PSC directed the state's three largest electric utilities (Consumers Energy, Detroit Edison, and Indiana Michigan Power) to assess and report on near-term generation and transmission capacities, plus any planned upgrades or additions, and how such capacity may affect service reliability and retail open access programs this coming summer. </p>
<p>The PSC expressed concern that long-term contracts may have tied up grid capacity and imposed "artificial" shortages. . L.A.B.</p>
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<h2>Transmission &amp; ISOs </h2>
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<p align="left"> <b>Non-Spinning Reserves.</b> Finding fault with a fix-it plan proposed in September, and seeing no resolution of market flaws, the FERC told the New York ISO to maintain its existing price cap of $2.52 (plus opportunity costs) in the non-spinning reserve market, and ordered a technical conference to explore possible solutions. </p>
<p align="left">"We find that the present state of the ... market is largely the same as that which precipitated mitigation in the first place," said the FERC, noting that several market flaws continued to persist: (1) a highly concentrated market, (2) no viable plan for allowing some participants to "self-supply" their own operating reserves, and (3) no solution to the problem of moving power reserves across transmission constraints from western New York to the eastern sector. </p>
<p align="left">Dissenting commissioner Curt Hébert questioned the idea of a conference: "The exchange ... may make for an interesting salon, but will lead nowhere." . -L.A.B. </p>
<p align="left"><b>Michigan Transco Plan.</b> Facing widespread opposition, the FERC agreed to rehear its order that allowed International Transmission Co. (to be created by Detroit Edison) to charge transmission rates pegged and frozen at the level of the transmission component of Detroit Edison's retail bundled electric rates, as set by the Michigan PSC. . </p>
<p align="left"><b>Must-Run Protocols.</b> The California PUC, ISO, and Electricity Oversight Board each filed protests opposing a new formula rate tariff proposed by Southern Energy Delta and Southern Energy Protrero, which is designed to allow Southern Energy to recover any potential revenues that it might otherwise lose on reliability must-run (RMR) plants because of new ISO Tariff Amendment 26. That amendment, known as the "pre-dispatch protocol," now forces RMR plant owners to choose between two alternative forms of payment: (1) the standard RMR contract payment, which includes variable costs plus a fixed-option payment for capacity value; or (2) the market-clearing price in the day-ahead energy market, but forces RMR owners to make that choice blindly, before the day-ahead market clears and the price becomes known. </p>
<p align="left">Southern Energy claims that the RMR contract allows plant owners to file rate changes to recover unforeseen costs imposed by future ISO tariff changes, but the PUC, ISO, and EOB claim that Southern's proposed formula rate is open-ended, putting no cap on potential recoveries, which would depend on differentials between RMR contract rates and hourly markets. </p>
<p align="left">In particular, the ISO points out that the availability of the RMR contract rate actually makes RMR owners better off than other generators, since RMR plants with high startup costs or long ramp-up times can keep running and avoid off-peak losses during periods when day-ahead market rates might otherwise fall below variable running costs. The ISO opposes recovery of opportunity costs, insisting instead that RMR dispatch should allow plant owners only to recover any net incremental costs (netted against incremental revenues) incurred by making their plants available for must-run dispatch. . </p>
<p align="left"><b>Midwest ISO Defections.</b> State utility commissions in Illinois and Michigan urged the FERC to delay its review of the request by Illinois Power (through its parent company Dynegy) to withdraw from the Midwest ISO in favor of the proposed Alliance Regional Transmission Organization, alleging that Illinois Power has not shown its request to be in the public interest. </p>
<p align="left">Moreover, the Illinois and Michigan regulators say it would be wrong for the FERC to decide the matter before it issues final decisions on the MISO and Alliance RTO proposals (yet to be filed under FERC Order 2000). </p>
<p align="left">The two commissions urge the FERC to allow only one RTO for the Midwest region. They say FERC inaction "has led directly to the RTO disarray" plaguing the Midwest, creating "uncertainty and speculation" in the region. . </p>
<p align="left"><b>Public Power Participation.</b> Three separate cases before the FERC raise questions concerning the rights of municipal electric utilities to join the California ISO and file tariffs for transmission service provided over their own facilities, reflecting their own transmission revenue requirements (TRR). </p>
<ul>
<li> In one case, the city of Vernon has asked the FERC to give "fast-track" status to its application to join the ISO-the first-ever such application by a municipal utility-to overcome alleged foot-dragging by the ISO and its participating transmission owners (PTOs). The city said it was "concerned that the ISO may be giving existing PTOs a veto right" over its application, and suggested that the PTOs were "attempting to coerce concessions ... by way of refusing to execute a [revised] transmission control agreement." . </li>
<li> In the second case, also involving the city of Vernon, the FERC said that with minor modifications it would accept Vernon's proposed TRR and 11.6 percent return on equity, as submitted by the Vernon city council (the governmental body that sets Vernon's rates), but only because the council's TRR and ROE used rate-setting methods for transmission service comparable to methods already OK'd for Southern California Edison. Thus, the FERC explained that it was not deferring to the Vernon city council, but would reserve the right to review nonjurisdictional municipal activities whenever they affect jurisdictional ISO activities. . </li>
<li>ISO Determinations. In the third case, the FERC OK'd a California ISO tariff that would require municipal utilities either to file their own TRR with the FERC for review, or to allow the ISO's own revenue review panel, after approving the municipal TRR, to submit it to the FERC for further review and acceptance, despite the FERC's lack of jurisdiction over municipal utilities. . </li>
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<h2>Business Wire </h2>
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<p>Avista Corp. subsidiary <b>Avista Advantage</b> has reached an agreement with <b>EnerTech Capital Partners</b> for a strategic business investment that includes capital, access to a wide network of resources, hands-on support, and counsel. The investment will be used to help refine, expand, and market Avista Advantage's growing suite of facility cost management service offerings and includes the first round of private equity financing. Terms of the agreement were not released. </p>
<p>Boston-based consulting firm <b>EFI Inc.</b> has teamed with <b>Savoy WebEngines Inc.</b> and been awarded $524,952 from the <b>U.S. Department of Energy</b> to bring to market the Internet-based energy management system, the Savoy WebEngine. The grant was one of 18 research and development projects selected by DOE to receive funding. The projects are designed to improve energy efficiency of commercial and multi-family residential buildings across the country by using less electricity and reducing pollution from heating and cooling systems. </p>
<p><b>Sermatech International</b> has acquired <b>Turbine Technology Services Corp.</b>, a high-technology engineered products and services provider for gas turbine and combined cycle power plants. Terms of the deal were not disclosed. "As the installed base of gas turbines has grown rapidly, power generation plant owners have been looking for ways to effectively reduce costs and to manage the complex outages required to keep their machines running efficiently," said James McCabe, president of Sermatech. The capabilities of Turbine Technology Services complement our growing core of gas turbine products and services enabling us to meet our customers' need for comprehensive maintenance packages." </p>
<p>In preparation for customer choice and retail competition beginning in Alberta on Jan. 1, 2001, <b>EPCOR</b>, an Alberta-based utility services provider, has implemented an advanced billing system from <b>Itron Inc.</b> to meet the billing needs of its commercial and industrial energy customers. Itron's MV-PBS is a client/server-based billing and market settlement solution that produces customized bills and invoices to meet the needs of commercial, industrial, and wholesale energy customers that purchase energy under a variety of complex rates, supply contracts, and schedules. </p>
<p><b>Convergent Group Corp.</b> has signed a definitive agreement with a wholly-owned subsidiary of <b>Schlumberger Ltd.</b>, whereby the Schlumberger subsidiary will acquire 71.7 percent of the outstanding Convergent Group common shares for $8.00 per share in cash. Convergent Group management and employees will own approximately 26 percent of the remaining shares, and <b>Cinergy Ventures LLC</b>, a unit of Cinergy Corp., the firm's largest client, will retain equity in the firm, holding the remaining ownership interest. -C.J.L.</p>
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<h2><font color="#FFFFFF">Power Markets <br /> California Prices: Real or Rigged? </font></h2>
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<p align="center"> <b>FERC review only opens up an endless debate.</b> </p>
<p><b>By Thanksgiving, after the Nov. 22 deadline had passed</b> at the Federal Energy Regulatory Commission for submitting comments on the remedies the agency had proposed to tame runaway power prices in California and the West, the whole question had split into three separate and distinct debates: </p>
<ul>
<li> Why should the "filed rate doctrine" bar retroactive refunds when prices are set by markets, not by tariffs? </li>
<li> Do California's high prices stem from anticompetitive behavior, market design, or simple scarcity of supply? </li>
<li> If a price cap is warranted, then what is the just and reasonable price? </li>
</ul>
<p>On Nov. 22, San Diego Gas &amp; Electric and Southern California Edison both asked the FERC to change its tune and order retroactive refunds of excess power costs. Edison saw the key problem as one of market power and abuse. By contrast, SDG&amp;E did not insist that market manipulation was to blame, but instead urged the FERC to cap wholesale prices based on costs incurred by generators. </p>
<p>Meanwhile, PG&amp;E asked the California Public Utilities Commission to stabilize rates and proposed a five-year stabilization plan that would lock the cap on wholesale power costs at 6.5 cents per kilowatt-hour ($65/MWh) for residential and small business customers, under a recently enacted state law that otherwise would give discretion to the PUC to adjust the 6.5-cent ceiling. But even that modest proposal could lead to trouble. In mid-November, California PUC commissioner Carl Wood suggested in a draft decision that the statutory 6.5-cent plan could make San Diego Gas &amp; Electric Co. even worse off, if significant numbers of large-volume industrial, commercial, and agricultural customers take advantage of the 6.5-cent plan, and if purchased power costs continue to rise. The PUC was expected to review Wood's proposed decision on Dec. 7. . </p>
<p><b>Retroactive Refunds?</b> At a public hearing before Chairman James J. Hoecker and Commissioner William Massey of the FERC, held in San Diego Nov. 14, California Gov. Gray Davis had again called on the FERC to require retroactive rate refunds for San Diego consumers. </p>
<p>"Your plan will make things worse next summer," Davis said, referring to the proposed order. </p>
<p>The governor's words echoed the comments of California state Sen. Steve Peace, who had testified a week earlier at the FERC in Washington, D.C. on Nov. 9, calling for retroactive refunds. Peace had questioned why the FERC should apply the filed rate doctrine (barring retroactive refunds) when rates are based not on cost of service, but on competitive forces. </p>
<p>"There's no filed rate," argued Peace, "because there is no cost of service." </p>
<p>In fact, just a few days earlier, Congressman Bob Filner (D-Calif.) had introduced new federal legislation (H.R. 5626) to amend the Federal Power Act to allow the FERC to order refunds of rates to the extent they exceed the just and reasonable level, with interest accrued "from the date on which the rate or charge was paid," in the special case where the FERC has prescribed market-based rates for the transmission or sale of electricity. </p>
<p>Refunds could prove problematic, however. Chairman Hoecker pointed out the problem in a statement he released on Nov. 17, asking for guidance. </p>
<p>"If the commission were to order refund of excessive rates," asked Hoecker, "how would we determine the excess in a market-based rate environment? What would be the just and reasonable rate? Who would be responsible for refunding the overcharge?" </p>
<p><b>Market Power or Broken Markets?</b> Testifying before the FERC on Nov. 9, Diane Jacob, chairwoman of the San Diego County Board of Supervisors, had laid it all on the table. </p>
<p>"I liken what is happening in San Diego to white collar crime and no less," she said. </p>
<p>Others blame the market structure. In comments filed Nov. 21 on behalf of ELCON, the Electricity Consumers Resource Council, and various industrial customer groups, attorney Sara Schotland reminded the FERC that her clients had been warning of structural flaws in the California market for years, especially the idea of dividing the power exchange from the independent system operator, and thus forcing the ISO to work through third-party scheduling coordinators to balance the grid in real time. </p>
<p>"As far back as July 25, 1994," said Schotland, "we warned that the U.K. model is better left in the U.K., and identified fundamental problems with the power exchange concept that unfortunately have been realized." </p>
<p>In their paper attached to comments filed by Southern California Edison, consultant Scott Harvey and professor William Hogan offered new explanations of structural market flaws in California. </p>
<p>"Prices have been high in California," they wrote, "surprisingly high." </p>
<p>In particular, Harvey and Hogan noted that because of the sequential nature of California markets, with a day-ahead auction for energy as a consumer product, followed by real-time auctions for ancillary services and energy system balancing, they believed that even those sellers lacking market power were withholding output from one auction to get a higher price in a later auction, thus causing day-ahead energy prices to rise to the level of opportunity costs represented by higher prices in later-clearing markets. </p>
<p>Surprisingly, however, they advised against abandoning the single-price principle in favor of a pay-as-bid auction. According to Harvey and Hogan, "pay-as-bid pricing systems introduce inefficiencies that raise market prices in a manner that can be hard to distinguish from the exercise of market power." </p>
<p><b>Costs, Caps, and Scarcity.</b> At the other end, many power marketers and power plant owners, such as Dynegy, Enron, and Calpine, have begun to argue that prices are not really out of line-they simply represent rising costs and scarcity of supply when compared with demand. </p>
<p>The marketers and power producers not only oppose the idea of price caps, but question how the FERC can hope to calculate a "just and reasonable" price for power, based on fuel prices, plant operating costs and characteristics, and the owner's profit expectations, when costs are changing so rapidly and each power plant and owner is unique. </p>
<p>Comments offered at the FERC's Nov. 9 hearing in Washington suggested that a reasonable power price, based on the costs of a gas-fired peaking plant, might vary anywhere between $75 and $350 per megawatt-hour, or even higher, even with the heat rate held constant, depending on such factors as the number of hours in the year during which the plant operates, and the number of years that the owners expect to wait before recovering their fixed costs. </p>
<p>Anyone eager to define the cost of generation should read the California PUC's motion in which it literally begs the FERC to help it force power plant owners to answer subpoenas requiring them to supply cost data. "The CPUC wants to know how much money each generating and trading entity is making." </p>
<p>On Nov. 14, California PX CEO George Sladoje announced the formation of a "Blue Ribbon Panel," led by Professor Alfred Kahn, to investigate criticisms of California's power markets and to determine whether the current rules for setting market-clearing prices in the PX day-ahead market produce a "fair and efficient" electricity price. The panel was to solicit comments from interested parties and meet in New York City on Nov. 28, and later in San Francisco on Dec. 12. </p>
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<h2>Mergers &amp; Acquisitions </h2>
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<p><b>Sierra + PGE.</b> Still following its old policy predating Order 642, FERC allowed Sierra Pacific Resources to acquire Portland General Electric, relying on two promises by the merged company to cap prices and to limit any firm reservations to one hour on any transmission facility that uses the constrained Alturas intertie. . </p>
<p><b>Federal Review. </b>Two-and-one-half years after issuing its original rulemaking notice, the FERC finally approved a final rule governing approval of electric and gas utility mergers, largely ratifying its existing "Appendix A screen" already used to evaluate horizontal competition, but with some new wrinkles added, such as adding ancillary services and real-time reserve markets to the list of relevant products. </p>
<p>The FERC also called for a technical conference to evaluate the use of computer models to simulate markets. </p>
<p>Nevertheless, the FERC largely ignored concerns raised by the Federal Trade Commission and others about relying on the merging utilities to supply and evaluate their own data, without independent validation. They noted that the Hart-Scott-Rodino law allows regulators to collect evidence from third parties, and allows for confidential, off-the-record give-and-take exchanges that may serve better to uncover threats to competition. </p>
<p>Commissioner Curt Hébert voted for the order but suggested that the FERC lacks antitrust experience and instead should rely more on the FTC and the Department of Justice for merger review. . L.A.B. </p>
<p><b>PUC Merger Review.</b> North Carolina regulators issued rules forcing electric or gas utilities seeking merger approval to submit a cost-benefit study and a market power analysis, despite opposition from Duke Energy and Carolina Power &amp; Light, which preferred to leave antitrust issues to federal agencies. . </p>
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<h2>Power Plants </h2>
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<p> <b>Expedited Licensing.</b> Faced with tight reserve margins and resulting political pressure, the California Energy Commission by a 4-0 vote on Nov. 15 adopted emergency regulations to implement the state's new six-month "fast-track" process for licensing thermal power plants, required by Assembly Bill 970, signed into law on Sept. 6. . -C.J.L. </p>
<p><b>AFUDC Financing.</b> Citing figures that it found "excessive," the Florida PSC denied a request by the investor-owned Florida Public Utilities Co. (FPUC) to accrue allowance for funds used during construction (AFUDC) at a rate of 11.17 percent to finance construction of a gas pipeline gate station and lateral to serve a new 200-megawatt, gas-fired power plant to be constructed by a third party. </p>
<p>Nevertheless, the PSC did OK a project-specific 14.4 percent return on equity (ROE), yielding an 11.17 percent return on net project investment, even though FPUC's current overall ROE (as set by state regulators) was only 11.4 percent. </p>
<p>The PSC explained that the higher ROE was the product of negotiations between a "willing buyer" and a "willing seller." . </p>
<p><b>Downwind Pollution. </b>The U.S. Justice Department, Environmental Protection Agency, and the State of New York have reached an agreement in principle with Virginia Power requiring the company to cut emissions (SO<sub>2</sub> and NO<sub>x</sub>) from its eight coal-fired power plants, pay a $5.3 million civil fine, surrender certain SO<sub>2</sub> emissions allowances, and contribute $13.9 million in environmental projects. </p>
<p>The agreement comes a year after the EPA and New York-and later New Jersey, Vermont, and Massachusetts-announced intentions to sue the owners of several Midwestern and Mid-Atlantic coal-fired power plants, two of which were owned by Virginia Power, for violating the federal Clean Air Act. -C.J.L. </p>
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Mon, 01 Jan 2001 05:00:00 +0000puradmin11545 at http://www.fortnightly.comNews Digesthttp://www.fortnightly.com/fortnightly/2000/09/news-digest
<div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Docket No. EL00-91-000, 92 FERC</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - September 1 2000</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 align="center">News Digest</h1>
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<h2>Power Markets </h2>
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<p><b>Price Cap Backlash.</b> The Federal Energy Regulatory Commission granted "fast-track" processing to review the complaint filed by Morgan Stanley Capital Group to overturn the $500-per-megawatt-hour price cap imposed in late June by the California Independent System Operator (but see below), but saw no need to force the ISO to rescind the cap. </p>
<p>As the FERC explained, a cap sets the price at which the ISO will buy power, and does not restrict options for sellers, as they can choose to sell into other markets. </p>
<p>Commissioner Hébert concurred in the result, but called on the FERC to investigate the ISO. "Getting to the bottom of the problem, in my view, requires us to begin a proceeding to rescind our approval of the ISO as the operator of the California grid." . </p>
<p>Earlier, on July 26, the FERC had asked its staff to conduct an investigation of price volatility in wholesale U.S. power markets, and to report back by Nov. 1, so that the commission could use the findings in evaluating proposals due from utilities by Oct. 15, regarding FERC Order 2000 and plans for regional transmission organizations. </p>
<p><b>California</b>. On Aug. 1 the board of governors of the California Independent System Operator voted 15-6 (two abstained) to lower the price cap from $500 per megawatt-hour to $250, effective from Aug. 7 to Oct. 15, in the real-time markets that it administers for ancillary services and congestion relief. </p>
<p><b>Northeast Region</b>. In separate orders, the FERC imposed temporary caps of $1,000 per megawatt-hour (the same level as PJM's price cap) governing bids by power suppliers in energy markets run by the New York Independent System Operator and the New England Power Pool. But the caps did not escape a dissenting opinion from commissioner Curt Hébert, who accused the majority of rushing in to cover "utility mistakes" that created exposed positions in the market. Hébert likened the majority's concern over using emergency measures to Captain Louis Rénault, the gendarme in the film "Casablanca" who was shocked to find gambling inside Rick's bar. Hébert repeated Casey Stengel's lament: "Can't anyone here play this game?" </p>
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<li> <b>New York ISO.</b> In New York, the FERC cited a lack of demand-side participation. "If load cannot respond to dramatic increases in prices," said the FERC, "then generators can submit very high bids that the ISO must accept when supply is tight."
<p>Nevertheless, the majority declined to include "anti-gaming" tariff rules requested by the New York state commission and various intervenors. Such rules would have placed a $24,000-per-megawatt limit on payments to suppliers over 24 hours, to prevent suppliers from attaching conditions to their bids requiring high minimum general levels or long minimum run times, as a way of evading the bid cap. Further, the bid cap will not apply to ancillary services, emergency imports into the region, or to so-called "sink price bids," which set the scheduling queue for exports out of the ISO area, since such bids do not affect prices paid by New York buyers. </p>
<p>The ISO board had sought the cap (set to expire on Oct. 28), but had suggested a higher bid maximum of $1,300-approximately equal to the highest observed day-ahead locational marginal price seen within the ISO, at least as of the end of June. </p>
<p>The FERC acknowledged that power supplies were tight, but predicted that the cap would not dry up imports from other regions since the New York ISO still maintained an installed capacity requirement. It said the weak demand-side volume was due, "at least in part, to factors that prevent retail customers from seeing the real-time hour price, rather than because [they] are inherently willing to buy electricity at any price." . </p>
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<li> <b>New England.</b> The call for bid caps had come from Nstar (holding company for Boston Edison), which had also asked for a study of market power and had cited a general failure of market mechanisms and a resulting lack of confidence by market participants. The ISO itself had opposed bid caps.
<p>In imposing the cap, the FERC agreed that the New England power market did not operate in a competitive manner: "New England's existing market rules make it profitable for generators to submit very high bids for a small portion of their capacity. ... When OP4 [emergency] conditions are declared ... generators know that virtually all bids will be accepted." </p>
<p>The FERC observed that New England's "clearing-price" form of auction was designed to encourage bidding at cost, but that the region's "actual experience" had not been "fully consistent with these bidding expectations." It added, "[P]rices in New England are vulnerable to spikes during OP4 conditions that are vastly in excess of prices at other times." . </p>
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<p> <b>El Paso + Coastal.</b> The FERC OK'd the merger between El Paso Energy Corp. and The Coastal Corp., finding no significant competitive concerns despite the fact that the two partners would be combining their merchant generation assets with upstream coal and natural gas fuel resources. . </p>
<p><b>NiSource + Columbia Energy.</b> The Virginia Corporation Commission OK'd the proposed merger of NiSource Inc. and Columbia Energy Group, completing the last of nine necessary state actions required for the merger. . </p>
<p>The FERC also approved the merger. It acknowledged monopoly attributes in some power markets affected by the merger, but said the combining of natural gas properties under the deal would not affect prices much. . </p>
<p><b>Post-Merger Job Cuts.</b> The New York PSC denied a petition filed by the Communications Workers of America alleging that New York Telephone Co. had violated the PSC's 1997 merger approval order for Bell Atlantic and NYNEX when it transferred certain back-office clerical jobs out of state. The PSC explained that the positions in question had not involved any "major job function." (The transferred employees corrected toll billing errors.) </p>
<p>"A typical benefit of any merger is the improved efficiency by combining redundant job functions," the PSC said. "The Commission expected that Bell Atlantic would take advantage of opportunities to achieve such efficiencies, and that they might include the movement of minor job functions in and out of New York State." . </p>
<p><b>WPS + Wisconsin Fuel &amp; Light.</b> After announcing in May their intent to merge, Wisconsin Public Service Corp., a subsidiary of WPS Resources Corp., and Wisconsin Fuel &amp; Light confirmed their interest in a combination on July 13 by signing a definitive agreement that would give WF&amp;L shareholders 1.73 WPSR common shares for each WF&amp;L common share, as long as WPSR common stock trades between $27.79 and $33.96. </p>
<p><b>Florida Progress + CP&amp;L.</b> The Florida PSC on July 7 opened a docket to review the earnings of Florida Power Corp., including the effects of the merger between parent company, Florida Progress Corp. with Carolina Power &amp; Light Co. The review is not expected to delay merger closing, scheduled for the fall. . </p>
<p>The FERC also approved the merger, relying on a letter filed June 30 by Florida Power's Vincent Dolan and CP&amp;L's Frank Schiller, on plans to form regional transmission organizations. The letter promised that (1) a new Florida transco would file an application with the FERC by Aug. 15, and (2) that CP&amp;L had made "significant and substantive progress" toward either forming a new Southeastern RTO or else joining an existing RTO. </p>
<p>But Tampa Electric Co. attacked the merger and asked for rehearing. It claimed that a competitive wholesale power market cannot function in Florida because the state Supreme Court in effect has banned new power plants by out-of-state merchant generators. . </p>
<p><b>Lyonnaise + United Water.</b> The New Jersey board on July 6 approved the first international takeover of a New Jersey utility by giving the green light to French company Lyonnaise American Holding to acquire United Water Resources. Lyonnaise increased its ownership in the nation's second-largest water services company from 30 percent to 100 percent, marking the water industry's largest transfer of ownership. </p>
<p>The order calls for a rate freeze for United Water-New Jersey for two-and-one-half years, as well as maintenance of present employee levels for one year. The company also agreed not to seek any recovery of transaction costs. </p>
<p><b>Southern Union.</b> The Missouri PSC allowed Southern Union Co. to acquire three New England natural gas utilities-Fall River Gas Co., Providence Energy Corp., and Valley Resources Inc. Regulators in Massachusetts and Rhode Island still must OK the deals. . </p>
<p><b>NS Power + Bangor.</b> Canadian company NS Power Holdings, parent of Nova Scotia Power and minority owner of Maritimes &amp; Northeast Pipeline, will purchase Maine-based Bangor Hydro-Electric for $206 million. </p>
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<h2>State PUCs</h2>
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<p> <b>Electronic Data Interchange.</b> The Pennsylvania PUC instructed electric distribution utilities and competitive energy suppliers to conduct transactions using an approved Internet protocol for electronic data interchange by March 31, 2001, but allowed such companies to ask for relief from the deadline if necessary. The PUC named the Gas Industry Standards Board Electronic Data Delivery Mechanism and EDIINT AS2 as being the "acceptable Internet protocols." . </p>
<p><b>Gas Capacity Rights.</b> The New York PSC reaffirmed a prior ruling that natural gas marketers no longer need to have firm capacity during the off-peak summer months (), but said it would reevaluate the issue in an upcoming gas rate and restructuring case involving Consolidated Edison Co., which had petitioned the commission for rehearing on the policy. </p>
<p>The PSC appeared somewhat swayed by ConEd's argument that gas marketers might lose capacity rights to electric generators, but saw no need to act immediately "because no plants are currently under construction in the New York City area and utilities still have capacity under contract." But it conceded that in the future, a generator conceivably could opt to take firm off-peak service, affecting service to high priority transportation customers. . </p>
<p><b>Right-of-Way Leasing.</b> The California PUC OK'd an arrangement whereby Southern California Edison Co. will lease potential sites for telecommunications facilities, including underutilized land parcels, to Pacific Bell Mobile Services. </p>
<p>"It is sensible for California's energy utilities, with their extensive easements, rights-of-way, and cable facilities, to cooperate in this manner with the telecommunications utilities that are seeking to build an updated telecommunications network," the PUC said. "Joint use of utility facilities has obvious economic benefits." </p>
<p>The PUC approved a 90/10 allocation of such lease revenues between utility shareholders and ratepayers. . </p>
<p><b>Names, Brands, &amp; Logos.</b> Maryland regulators found it "appropriate, in principle," to impute a royalty to regulated gas and electric utilities for the goodwill value and other "unquantified benefits" inherent in the utility name and logo used by an unregulated affiliate (such use is permitted in the state), but will require a disclaimer that the utility and the affiliate operate as distinct corporate entities. </p>
<p>The state commission will open a separate case to calculate benefits and royalties, and has told most energy utilities to file cost allocation manuals no later than Nov. 1 to address cross-subsidies between utilities and affiliates. . </p>
<p><b>Arkansas Restructuring.</b> The Arkansas PSC approved various measures over the summer to implement the state's electric restructuring law, the Electric Consumer Choice Act of 1999. n Billing and Metering. Introduces competition for production and issuance of bills, payment and collection, and related call center functions. (Metering and dissemination of metering information in "bill-ready" or "rate-ready" formats is still regulated.) . </p>
<ul>
<li> EDI. Adopts standards for electronic data interchange by Jan. 1, 2002 (startup date for supply competition). Will address specific procedures for exchanging data in defined situations at a later date. . </li>
<li> Market Power. Requires utilities and utility affiliates to conduct market power analyses for all competitive products and services. . </li>
<li> Customer Education. Includes explanations of the standard-offer service package, itemized billing, reliability and safety, customer protections and rights, and confidentiality of customer-specific information. . </li>
<li> Utility Affiliates. Adopts an "arm's length" standard for review of deals between utilities and affiliates. . </li>
</ul>
<p><b>Interruptible Rates.</b> Responding to unusually high prices and increased demand for electricity, the Oregon PUC on June 30 approved a Portland General Electric pilot tariff that gives the utility's larger customers incentives to cut back on power usage. PGE will pay large industrial users that voluntarily cut their electric loads when prices are high a price that is less than it otherwise would cost PGE to buy power and serve them. </p>
<p><b>Purchased Power Costs.</b> The Virginia commission OK'd a plan for Conectiv subsidiary Delmarva Power &amp; Light Co. to separate its generation units from its distribution system, subject to a "rate case protocol" to guarantee that the generation component of future rates does not increase above the level it would have been if the utility had held on to its power plants. . </p>
<p>Also, the commission deferred any ruling on whether Delmarva's participation in the PJM Interconnection LLC satisfies a requirement in the state's restructuring law that wires utilities must join a regional transmission group. It will consider that issue in . </p>
<p><b>Purchased Power Costs.</b> The D.C. PSC, explaining a prior order that OK'd sales of generating plants by local utility, Potomac Electric Power Co., said it was never its intent to force the District's electric customers to buy all their energy through the PJM ISO. </p>
<p>"[I]t was never our intent to extend PJM's rules to local retail transactions, nor were we expressing a view that we lack authority to regulate prices in the retail market," the PSC said. </p>
<p>The prior order had required any plant buyer to operate the facilities in accordance with the PJM power pool rules governing reliability and market power monitoring and mitigation. . </p>
<p><b>Internet Radio Networks.</b> The New York PSC told Con Ed to file "hybrid" tariffs for low-level electric service provided to Metricom Inc. for radio transceivers to be attached to street lights and utility poles to create a radio network for connecting consumers to the Internet. </p>
<p>It rejected Con Ed's proposal to bill such service under its traditional "SC2" rate for small-volume commercial customers. </p>
<p><b>Gas LDC Bypass.</b> North Carolina regulators OK'd rates and terms for gas distribution service provided to the new 800-megawatt, gas-fired Rockingham power plant, but at the same time took a jab at the FERC for its policy of encouraging plant owners and other natural gas customers to bypass local distribution companies (LDCs) by taking service directly from interstate pipelines. </p>
<p>"The FERC's policy ignores an ancient and immutable law of commerce," said the state commission. "You cannot compete retail against wholesale." According to the state commission, FERC bypass "undermines" state efforts to bring gas service to unserved areas. </p>
<p>In the case in question, the Rockingham plant (a Dynegy affiliate) sought direct sales from Transcontinental Gas Pipe Line Corp., bypassing NUI North Carolina Gas (the LDC). The FERC in fact had allowed Transco to build the necessary delivery facilities, but the parties eventually settled on LDC service. . </p>
<p><b>Purchased Gas Costs. </b>Citing an "unprecedented increase" in summer-period natural gas prices of more than $1.40 per Mcf, the Ohio PUC approved a major increase in natural gas cost recovery rates for Dayton Power &amp; Light Co., a natural gas local distribution company. (The PUC recently had approved similar increases for two other LDCs, Cincinnati Gas &amp; Electric and East Ohio Gas.) . </p>
<p><b>Gas Universal Service.</b> The Pennsylvania PUC took a step in implementing the state's Natural Gas Choice and Competition Act, signed by Gov. Tom Ridge in 1999, by setting standard reporting rules for gas utility programs for universal service and energy conservation. . </p>
<p><b>Manhole Explosions.</b> After a series of explosions that propelled manhole covers into the air on crowded city streets, the District of Columbia PSC told Potomac Electric Power Co. to inspect its low-voltage distribution cables and to consider developing a program for replacing cables older than 20 years. It also asked Pepco to consider the feasibility of separating primary and secondary underground cables as well as transformers. . </p>
<p> </p>
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<h2>Transmission &amp; ISOs</h2>
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<p> <b>Congestion Management.</b> Utilities, power producers, and transmission owners and operators still were fighting among themselves over the future design of markets and rules in the New England region, even after the FERC a month earlier had OK'd a new congestion management system for the New England ISO. </p>
<p>As of late July, parties were calling for rehearing on the FERC decision, raising complaints on numerous issues, running the gamut from generator scheduling and congestion contract rights, to capacity requirements, transmission planning and the division of authority between the ISO and the New England Power Pool. </p>
<p>Even so, the ISO admitted it would take two years to implement the new model, during which time the region would continue to "socialize" congestion costs, spreading them among all buyers and sellers. Commissioner William Massey termed the delay "bad news," and urged the ISO to save time by buying the same software already used by the PJM ISO. The Maine PUC, one of those urging a rehearing, asked the FERC why it had not turned to the alternative proposal of the "Anti-Subsidy" coalition for immediate relief, since the FERC had found in effect that continued cost socialization qualified under the Federal Power Act as an unjust and unreasonable rate. </p>
<ul>
<li> The ISO attacked the FERC for requiring a second category of fixed congestion rights (FCRs) that would operate like hedging options, so that holders would not have to pay even if congestion occurred in the opposite direction as assumed by the FCR. "An option-type FCR is a worthwhile product," the ISO admitted, "but like many new concepts, it involves considerable complexity and implementation challenges." </li>
<li> The ISO also opposed the FERC rule allowing power producers to "self-schedule" by submitting essentially a zero bid, to guarantee dispatch and avoid any ramp-down despite the ultimate clearing price. Instead, it suggested a system of negative decremental bids, as permitted in New York and proposed in PJM. </li>
<li> Enron asked the FERC why it denied authority to the ISO to eliminate its installed capacity (ICAP) requirement, even though the commission agreed that the existing auction process could inflate prices in a way unrelated to the problem of capacity deficiency. Enron termed the ICAP rule a "second-best" determination of need, "when market prices can do so much better." It touted testimony from Maryland economics professor Peter Cramton, who called ICAP a holdover, and attacked opinions offered generators who "make money from the ICAP obligation." </li>
<li> National Grid, NSTAR, and several others opposed the new model because it "strips" NEPOOL transmission owners (TOs) from direct decision making in regional planning for transmission expansion, other than fulfilling a backstop role in case the ISO committee cannot reach a consensus, on the assumption that TOs, the FERC said, would "bias the plan in favor of their own competitive interests." National Grid argued that TO participation jointly with the ISO would "in no way hinder" others from proposing their own projects. </li>
<li> NEPOOL attacked language in the FERC order, saying it could be read to suggest that the ISO now would assume authority for bringing tariffs and market rules into compliance with the new congestion system. NEPOOL argued that despite its past problems in decision making (some actions require a two-thirds vote of its members) it is the only agency that can amend its own agreements and tariffs. Docket Nos. EL00-62-000, et al., 91 FERC 61,311, June 28, 2000, petitions for rehearing filed July 28, 2000. </li>
</ul>
<p><b>Return on Equity.</b> Citing "significant differences" between electric utilities and interstate natural gas pipelines, the FERC OK'd an 11.6 percent return on equity (ROE) for Southern California Edison Co. for electric transmission service provided over lines under the control of the California ISO, rejecting the 9.8 percent return rate set earlier for SoCal Ed by an administrative law judge. </p>
<p>The FERC said it would use a "constant growth" variation of the traditional discounted cash flow (DCF) method to set ROE for the electric transmission business. By contrast, the ALJ had adopted the same method used for gas pipelines, with a two-stage model of dividend growth that assumes that long-term growth at pipelines will mirror the gross domestic product. The FERC explained that ongoing industry restructuring puts the transmission business in a different category from pipelines, as electrics feature higher payout ratios, meaning less growth. (SoCal Ed's ratio was 55.38 percent.) </p>
<p>"This distinction is critical," said the FERC, "because retained earnings are a key source of dividend growth." It added that Prudential Securities treats electric utilities differently from all other industrial companies when estimating growth rates, even though it does rely on GDP data to judge long-term growth for gas pipelines. . </p>
<p>OASIS and RTOs. In spite of Commissioner Curt Hébert calling the initiative "a waste of time," the FERC issued an advance notice of proposed rulemaking seeking detailed proposals by Feb. 15 for certain communications protocols and standards to implement open access same-time information systems (OASIS) phase II. </p>
<p>OASIS phase II will incorporate electronic scheduling and apply to the communications and related business practices between customers and transmission providers, including regional transmission organizations. </p>
<p>Commissioner William Massey said the FERC had opened the case to help OASIS nodes evolve into RTOs, and that it wants a "common look and feel" to OASIS websites. Hébert, though voting for the order, said that Order No. 2000 already applied OASIS to RTOs. Docket No. RM00-10-000, 92 FERC 61,407, July 14, 2000 (F.E.R.C.). </p>
<p> </p>
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<h2>Gas Pipelines </h2>
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<td><b>Independence/SupplyLink.</b> The FERC granted certificates to Independence Pipeline and ANR Pipeline Co.'s SupplyLink Project, after the two companies filed precedent agreements to meet the requirement that they each have contracts with nonaffiliated shippers for at least 35 percent of proposed capacity. Before construction may begin, however, the companies must submit firm agreements with no "out" clauses. .</td>
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<p>
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<h2>Business Wire </h2>
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<p><b>The Midwest Independent Transmission System Operator Inc.</b> has signed a contract with the <b>RTO Alliance</b>, which consists of <b>ALSTOM ESCA Corp.</b>, <b>Open Access Technology International, Perot Systems,</b> and <b>TenFold Corp.</b>, to deliver an integrated control center system that will provide $50 million in infrastructure for the MISO, the largest independent transmission system operator in the United States. The hardware and software will support MISO's operational functions including transmission planning, reservation, scheduling, real-time monitoring and control settlement, and billing. </p>
<p><b>SCT</b> has signed a contract with <b>IBM</b> to integrate SCT's Banner customer relationship management software with IBM's technology solutions for The New Power Co., a recently announced utilities venture spearheaded by <b>Enron Corp.</b> Under an agreement between <b>IBM Global Services</b> and SCT, the SCT Banner customer information system will be integrated into numerous back-office information technology solutions under development by IBM for The New Power Co. These solutions include customer care, electronic data interchange, billing, and a variety of other functions. </p>
<p><b>PowerTrust.Com</b>, an Internet-based energy company for homeowners and small businesses, has unveiled PowerInternet, the first free Internet service provider available from an online energy company. The service (<a href="http://www.PowerInternet.net">www.PowerInternet.net</a>) is available through a partnership between PowerTrust.Com and <b>MillionEyes.Com</b>, which develops marketing solutions and brand equity for companies and organizations in the form of private label, premium Internet service. </p>
<p><b>HoustonStreet Exchange</b> has entered into a memorandum of understanding with <b>Enron</b>, under which North American electricity and natural gas prices posted on EnronOnline automatically will be posted on HoustonStreet.Com. Traders will be able to act on the EnronOnline prices via either platform. The addition of EnronOnline pricing will correspond with the launch of HoustonStreet's natural gas platform in September. </p>
<p><b>Otter Tail Power Co.</b> has announced the sale to <b>Retx.Com</b>, an e-business provider to the retail energy industry, of a model for an Internet-based software technology designed to facilitate and ensure robust customer choice in the retail electric market. The sale gives Retx.Com exclusive rights to the technology, with Otter Tail retaining certain royalty rights on product sales for five years. "The technology provides customer switching, scheduling, and imbalance accounting in a deregulated electric utility industry," said John MacFarlane, president and CEO of Otter Tail. </p>
<p> </p>
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<h2>Studies &amp; Reports </h2>
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<p><b>Electric Competition.</b> On July 21 the U.S. Federal Trade Commission issued a staff report on electric utility restructuring, calling the industry the "latest and largest" in which extensive regulation has been made "obsolete" through advances in technology, most notably the combined-cycle natural gas turbine. It called on restructuring efforts to focus on market power that could lead to predatory pricing: </p>
<ul>
<li> The report implies that utility mergers may have gone too far in concentrating ownership of generating resources: "Current antitrust laws are not designed to address the mere possession of market power or the legitimate acquisition of or increase in market power through lawful regulatory processes." </li>
<li> Citing fuel cells and distributed generation as likely alternatives to the transmission grid, the report urged regulators to insist on independent control and operation of the transmission grid. The FTC predicted that owners of transmission (and now distribution) assets still have profit incentives to deny grid connections to power producers. . </li>
</ul>
<p> </p>
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<h2>Electric Reliability </h2>
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<p><b>Statewide Standards.</b> Addressing power outages at Delmarva Power &amp; Light Co. back in July 1999, the Delaware PSC declined to initiate a generic docket to consider implementing state reliability standards, but directed the staff to study and report back on "the most appropriate manner" to tackle the issue. </p>
<p>"[W]e do not believe that a generic proceeding involving a host of participants is the most appropriate manner in which to proceed at this point, even though the issues on a general level might be similar for all distribution companies subject to our jurisdiction," said the PSC. </p>
<p><b>Needs Forecasts</b>. As the Wisconsin PSC on June 29 issued a draft of its "strategic energy assessment" and set a public hearing for Sept. 18 to review the draft (comments are due Sept. 28) it also found on its plate proposals for both a major power plant and a 240-mile transmission line. The draft assessment, which offered forecasts through 2002, found that while the regional bulk power market provided "an adequate and reliable" source of capacity and energy between 1995 and 1999, current needs required "further study," as energy sales in the state were growing at an annual clip of 2 percent, while no new base load generating units had achieved commercial operation since 1985. See <a href="http://www.psc">www.psc</a>. state.wi.us/cases/sea/index.htm. . </p>
<p>Previously, on June 12 the PSC had issued its final environmental impact statement on the 1,050-MW natural gas-fired, combined-cycle power plant proposed to be built by Badger Generating Co. LLC in either Pleasant Prairie or Sturtevant, finding no major environmental concerns for either site. If approved, the facility would be the state's first true wholesale merchant plant that is not dependent on any preexisting power purchase arrangements with public utilities. . </p>
<p>Meanwhile, the Citizens Utility Board, a consumer advocate group, has come out against a proposed 240-mile transmission line that would connect Minnesota Power Co.'s Arrowhead substation, near Duluth, Minn., to Wisconsin Public Service Corp.'s Weston substation near Wausau, Wis. A May 2000 draft environmental impact statement for that project is available at <a href="http://www.psc.state.wi.us/cases/05CE113/deis.htm">www.psc.state.wi.us/cases/05CE113/deis.htm</a>. </p>
<p> </p>
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<h2>Courts</h2>
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<p><b>Standard Offer Prices. </b>The Maryland Court of Appeals on July 20 lifted a stay in force since June 30 that had put electric retail choice on hold for Baltimore Gas &amp; Electric Co. owing to claims by the Mid-Atlantic Power Supply Association that standard offer prices for the BG&amp;E territory were set too low to allow other suppliers to compete. </p>
<p><b>Railroad Mergers.</b> A federal appeals court upheld a move by the U.S. Surface Transportation Board to place a 15-month moratorium on the filing of applications for railroad mergers. The STB said it needed time in a changing world to revaluate its methods for analyzing effects on competition and the public interest. . </p>
<p><b>Charitable Contributions. </b>A New Jersey court upheld a state PUC ruling that allowed a water utility to bill ratepayers for 50 percent of its charitable contributions. </p>
</td>
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<hr />
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Fri, 01 Sep 2000 04:00:00 +0000puradmin10720 at http://www.fortnightly.comNews Digesthttp://www.fortnightly.com/fortnightly/2000/06-0/news-digest
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Electric Reliability</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Case No. 2000-095, May 15, 2000 (Ky.P.S.C.).</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - June 15 2000</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 align="center">News Digest</h1>
<p><center> </center> <center> </center> <br />
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<h3>Electric Reliability</h3>
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<p> <b>Regional Summer Assessments.</b> The North American Electric Reliability Council was set to release its annual summer reliability assessment on May 22, after this issue went to press, but in the meantime, many other regional reliability councils and independent system operators had already issued summer forecasts for generation adequacy and system reliability. </p>
<ul>
<li> <b>New York ISO.</b> Forecasted a peak demand of 30,200 megawatts, representing an increase of 1.7 percent over 1999. It said it had completed a successful auction in the installed capacity market to secure enough generation to satisfy the reserve requirement (18 percent above demand) of 35,636 MW set by the New York State Reliability Council. </li>
<li> <b>ISO New England. </b>Forecasted summer peak demand at 23,250 MW, compared to last year's peak of 22,544 MW, set July 6. Citing new plants coming online, plus favorable nuclear availability, it predicted "an overall improvement" over the last few summers. </li>
<li><b> California ISO.</b> Warned of "slim" power reserves, predicting (with normal weather) a summer peak load on the ISO-controlled grid of 46,250 MW (representing 37,950 MW of internal generation and 8,400 MW of imported power), compared to a 1999 peak of 45,884 MW. </li>
<li> <b>MAIN.</b> Predicted "improved electric reliability" in the Midwest this summer, in light of some 3,000 MW in new generating capacity expected to be online before the high season arrived. MAIN anticipated a summer noncoincident peak demand of 49,615 MW, compared to last year's peak of 49,027 MW. </li>
<li> <b>ECAR.</b> Predicted an 11.2 percent capacity margin in summer 2000, compared with 10.8 percent last summer, due in part to the addition of new generation, reactivation of mothballed generation, and a transfer of load certain obligations from ECAR utilities to entities outside the region. It predicted a net summer peak of 95,765 MW, or about 0.4 percent below last year's record peak demand of 96,149 MW. Nevertheless, it warned that in-service schedules for capacity additions "have the potential for slipping," representing a possible 2.646 MW in shortfall. It added that "under all assumed severe condition scenarios, the ECAR region will have insufficient resources available during the peak summer demand period without a higher level of transmission import." </li>
<li><b> PJM ISO. </b>Forecasted an increase in summer peak load of about 1,400 MW, up to 51,161 for 2000, as compared with 49,751 MW for 1999. It said that no emergency load procedures would be required if anticipated conditions occur, but warned of emergency load controls imposed if "extreme weather" prevails. It added that "May 9, 2000 temperatures reached levels that were last recorded 125 years ago." </li>
</ul>
<p> </p>
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<h3>Mergers &amp; Acquisitions</h3>
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<p> <b>LG&amp;E + PowerGen.</b> Kentucky regulators OK'd the takeover of LG&amp;E Energy Corp. by PowerGen PLC, acknowledging no real merger savings through integration (since PowerGen has "no business presence" in the United States), but citing PowerGen's promise to set up its U.S. headquarters in Louisville- a factor the PSC said would give "top priority" to economic development in Kentucky. </p>
<p><b>NSP + New Century.</b> The North Dakota PSC OK'd the merger of Northern States Power Co. and New Century Energies, finding that energy consumers in the region would benefit through lower gas and electric prices, as well as savings from more options in electric transmission service. </p>
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<p><b>Summer Emergency. </b>The Federal Energy Regulatory Commission on May 17 issued an interim order announcing specific actions aimed at promoting electric reliability this summer, and requesting comments on those actions as well as other steps it can take to increase reliability. The commission acted in response to what it expects will be another summer of potentially high peak demands, and the commissioners used the opportunity to ask Congress for legislation giving FERC authority over reliability. The commission OK'd five measures through September 30: </p>
<ul>
<li> <b>On-Site Generation.</b> Streamlining regulation to foster on-site generation; </li>
<li><b> Demand-Side Management.</b> Facilitating DSM by waiving the prior notice required for filing of new tariffs and encouraging proper calculation of incremental avoided costs; </li>
<li> <b>Transmission Capacity.</b> Encouraging utilities to reassess capacity benefit margin, which represents transmission capacity set aside and reserved for possible use for importing out-of-area resources in the event of outages; and </li>
<li><b> New Ideas.</b> Making FERC staff available to hear practical ideas promoting reliability. </li>
</ul>
<p>Commissioner Curt Hébert wrote a concurring opinion to "lament the lost opportunities of this order." He believes the FERC should have done more earlier to promote building of generation. Commissioner William Massey called for legislation from Congress establishing one set of reliability rules, noting "that the existing scheme of voluntary rules will not work in a competitive market." </p>
<p><b>Purchased Power Costs.</b> The Michigan PSC rejected a motion by a ratepayer coalition that the PSC must disallow recovery of costs incurred by Detroit Edison to acquire operating power reserves, on the theory that the reserves represented excess capacity because the power purchases executed by the utility already inherently were backed by the reserve margins of the sellers of those principal resources. </p>
<p>According to the PSC, that theory would mark a departure from how utilities determine reserve margin. The PSC added, "Indeed, Detroit Edison experienced nondelivery of purchased power on eleven days in 1998 in a total amount of 28,500 [megawatt-hours], which undermines [the theory] regarding the reliability of purchased power." </p>
<p> </p>
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<h3>Transmission &amp; ISOs</h3>
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<p><b>Liability, Penalties, Software.</b> On May 8 various utilities, marketers, and other groups filed over 35 separate briefs in the massive case at the FERC to settle hundreds of unresolved tariff issues involving the California ISO. </p>
<p>Several key issues stood out, including (1) ISO liability for negligence, (2) ISO authority to penalize traders under its market monitoring power, and (3) whether the ISO must disclose algorithms and other details in its proprietary software. </p>
<ul>
<li><b> Liability- Issue 676.</b> Consumer advocates urged the FERC to enforce ISO liability only for gross negligence, as it did in New York. The California ISO urged the same: "The real fear should be that greater liability exposure would likely dissuade transmission owning entities from even joining an RTO." But Dynegy, Enron, PG&amp;E, and various municipal utilities and irrigation districts say because of differences in state law, the FERC should treat the California ISO differently from New York and instead impose liability for ordinary negligence. The California PUC stayed neutral. </li>
<li><b> Penalties- Issue 631.</b> Enron, Dynegy, and the Western Power Trading Forum argue that the ISO must "cleanse" its tariff of certain "offending provisions" that give it the right to play both "judge and jury" and impose sanctions and penalties on market participants when it uncovers "anomalous market behavior." Even though the ISO is not a "market participant" in the traditional sense, the marketers claim that "the ISO operates and controls virtually the entire Ancillary Services market in California." They add, "The ISO has a vested interest in dispelling any allegation that its own negligence could have been a contributing factor in any market anomaly É the ISO will always be biased towards finding parties to blame." </li>
<li><b> Software Disclosure- Issue 537.</b> In October 1997, the FERC directed the ISO to make its computer algorithm publicly available to all market participants, and various marketers and municipal utilities have renewed that demand, calling for FERC to force the ISO to reveal all components, including the computer program, network database, tuning parameters, and "other heuristics" used by the ISO to operate the algorithm. But the ISO maintains that some software is proprietary and disclosure could violate confidentiality obligations under its contract with its outside software vendor. </li>
</ul>
<p><b>Installed Capacity. </b>Citing bidding behavior that looked like price manipulation, ISO New England on May 8 renewed its request to the FERC for authority to terminate its monthly auction market for installed capacity, effective June 1, and for additional guidance on market monitoring and strategies to mitigate market power. The move would leave the ISO with five remaining product markets, each priced on an hourly basis: (1) Energy, (2) 10-Minute Spinning Reserve, (3) 10-Minute Non-Spinning Reserve, (4) Automatic Generation Control, and (5) 30-Minute Operating Reserves. </p>
<p>The ISO also formed a small working group to formulate new models for a capacity reserve market, and said it expected Harvey Reed of Constellation Power Source to chair the group. (Reed also chaired the NEPOOL working group for congestion management and multi-settlement systems.) </p>
<p>The installed capacity requirement forces load-serving entities (LSEs) to maintain ownership or contract rights to capacity to satisfy monthly peak load. The auction allowed bidders to sell the excess or make up any deficiency.In actual bidding, however, the ISO observed anomalies, including an unusual "j-shaped" supply curve, coupled with monthly peaks rising from about $1,000 per megawatt in mid-1999 to as high as $99,999 in mid-winter 1999-2000. </p>
<p>In January, in fact, the ISO found it necessary to reprice one particular bid- which dropped the clearing price from $10,000 per megawatt all the way to zero- after the ISO found that one bid of over 2,000 MW at a price substantially higher than $10,000 had represented over 60 percent of the total non-zero bids for the month. </p>
<p>By contrast, the ISO found that an "active" bilateral market for capacity had emerged in New England, totaling 27,900 MW for March 2000, at contract lengths ranging from one month to a year or longer, which it said exceeded NEPOOL's entire installed capability. But the ISO acknowledged that the bilateral market could represent the "trading and retrading" of the same megawatts, "to a degree not easily possible to quantify." </p>
<p><b>Market Chaos.</b> Alleging that software problems and communications failures were so pervasive that action was needed "to avert a potential disaster this summer," New York State Electric &amp; Gas Co. petitioned the FERC to suspend all market pricing programs operated by the New York ISO for energy, reserve capacity, and ancillary services, for the period June 1 through Oct. 31, and to revert to cost-based pricing. </p>
<p>But cooler heads soon prevailed, and NYSEG agreed to withdraw its request, on consultation with other members of the ISO, including Central Hudson Gas &amp; Electric, Consolidated Edison, Niagara Mohawk, Orange &amp; Rockland, the Long Island Power Authority, and Rochester Gas &amp; Electric. The scaled-back proposal asks the ISO to work out problems internally, and report back to the FERC. </p>
<p><b>Must-Run Plants.</b> The California PUC weighed in on the side of the ISO and a "buyers' coalition" of investor-owned electric utilities in a dispute of whether so-called RMR (reliability must-run) plants should earn a profit when dispatched by the ISO. The dispute involves the private power producers, Southern Energy Delta and Southern Energy Potrero, which own three power plants in the San Francisco "load pocket." </p>
<p>Southern argues that when the ISO dispatches "must-run" plants, it should pay owners a "fixed option payment" (FOP) that compensates them for both incremental operating costs and fixed capital costs. Anything less, says Southern, would amount to a "zero-profit" rate. </p>
<p>The ISO, the utilities, and the FERC trial staff all oppose Southern's argument, pointing out that in most cases Southern does not need to interrupt sales of output from the plants under profitable bilateral contracts in order to comply with the ISO's dispatch orders, so that revenues from bilateral sales are available as a credit against fixed capital costs. Otherwise, say the buyers, Southern would profit from "market power." </p>
<p>Yet Southern countered, "The parties seem to suggest that 'locational rents' are the same as the exercise of market power, which they are not." Southern argued that even the buyers' witness Larry Ruff "conceded at hearing that there was a difference between the ability to capitalize on good locations and the exercise of market power." </p>
<p> </p>
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<h3>State PUCs </h3>
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<p><b>Stranded Costs.</b> In an interim order, the Illinois commission allowed Commonwealth Edison Co. to revise its plan for calculating market prices to set transition charges to recover stranded costs. Com Ed would replace the "neutral fact finder" (NFF) process that had required utilities and marketers to submit summaries of contracts to a committee appointed by the commission. </p>
<p>In his separate concurring opinion, commission chairman Richard L. Mathias said that utilities, consumers and retail suppliers all had questioned the NFF approach- that it could create a "real likelihood" of a "re-monopolization" of the Illinois electric industry. </p>
<p>Com Ed's new plan would calculate peak market prices and forward transaction prices along with bid/ask prices from transactions posted on Altrade and Bloomberg "PowerMatch," two real-time, online electronic power trading exchanges. For off-peak pricing, the utility will use historical day-ahead data published in . To develop hourly prices for each monthly peak- and off-peak period, Com Ed would use locational marginal prices from the 1999 PJM-West Interconnection. The price shape data is then used to translate average block price data into hour-by-hour market values. </p>
<p><b>Electric Choice.</b> Regulators in Virginia OK'd the state's first pilot program (in Richmond, served by Virginia Power) for electric supplier choice, to be available Sept. 1. The program will double in 2001, when another 35,000 customers become eligible in a service area yet to be determined. It was described as "large enough to attract competitive suppliers yet manageable enough to avoid administrative pitfalls." </p>
<p><b>Utility Marketing Affiliates. </b>The Wisconsin PSC ruled that utilities and their affiliates could continue to share resources with all costs fully allocated- except where such sharing is expressly barred, as in natural gas marketing. It found no present need for rules on standards of conduct, but said it would continue to monitor dealings between utilities and affiliates through the existing law, including the state's holding company statute. </p>
<p><b>Medical Equipment.</b> The New York PSC called on utilities to improve service to customers using electricity to run life support equipment (LSE). It said that any customer information system should be capable of identifying customer accounts using LSE in case of outages, voltage instability, or brownout conditions. It recommended that utilities install devices like Central Hudson's "Advisor" or Con Ed's POND. </p>
<p><b>Shopping Credits. </b>To discourage large-volume customers from churning accounts, the Delaware PSC allowed Delaware Electric Co-op Inc. to force customers with demands greater than 300 kilowatts to stay on with the co-op if they return to take bundled electric distribution and commodity service. The PSC set the co-op's shopping credit at 5.197 cents per kilowatt-hour, ignoring the co-op's protest that the figure exceeded Delmarva P&amp;L's shopping credit (4.846 cents) and would offer a "false price signal." </p>
<p><b>Real-time Pricing.</b> Responding to complaints from the Georgia Textile Manufacturers Association and Georgia Industrial Group, the Georgia PSC modified how Georgia Power calculates real-time pricing rates paid by its largest industrial customers, requiring the utility to use the average cost. The change should lower rates by $7 million annually. </p>
<p><b>Shopping Credits.</b> The Midwest Marketers' Coalition opposed the transition plan settlement proposed on April 17 between the Ohio PUC staff and FirstEnergy, claiming it would set an artificially low shopping credit. "In both Massachusetts and Rhode Island, the shopping credits were set below the cost of supplying retail customers," claimed Scott Brown, spokesman for the coalition. "After two years of competition in both states, less than 1 percent of residential customers have switched." </p>
<p><b>Gas Pilot Programs. </b>The Iowa board allowed MidAmerican Energy Co. to extend a gas sales pilot program that offers long-term contracts to smaller customers at a fixed commodity price, despite allegations that the program might hamper the development of gas competition in the state. </p>
<p><b>Natural Gas Rates.</b> The Wyoming PSC allowed Questar Gas Co. to continue to earn an 11.83 percent return on common equity, saying it was reluctant to penalize the company for having filed the rate case voluntarily to reduce rates. </p>
<p><b>Purchased Power.</b> Noting the success of competitive markets in wholesale generation, the Alabama PSC allowed Alabama Public Service Co. to revise its longstanding plan for recovering the fixed costs of electricity supply. The revised plan will set a power rate factor based on the estimated cost of purchased power, excluding any energy charge costs recoverable through the utility's automatic adjustment clause. </p>
<p><b>Affiliate Rules.</b> New Mexico regulators set a code of conduct governing anticompetitive practices in transactions between utilities and affiliates, covering issues ranging from access to transmission and distribution lines and disclosure of customer information. . </p>
<p><b>Supplier Certification.</b> The Texas PUC set a public hearing for June 15 on proposed rules for certifying retail electric providers (REPs) in the newly competitive market scheduled to begin in 2002. Final rules were expected by late July. </p>
<p> </p>
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<h3>Courts </h3>
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<p><b>Union Lockouts.</b> A federal appeals court upheld a ruling by the National Labor Relations Board that Central Illinois Public Service Co. did not commit an unlawful labor practice when it "locked out" union employees who, in lieu of striking, had instituted "inside game" tactics, such as working "to the rule" and refusing voluntary overtime. The court said the utility was entitled to counter such activities. </p>
<p><b>Transmission Pricing.</b> A federal appeals court ruled that an electric utility cannot unilaterally modify the terms of an existing transmission service contract under the doctrine, even though the contract rates are much higher than they would have been if negotiated at a later date under the provider's open access transmission tariff (OATT) filed under FERC Order 888, as long as the buyer only is acquiring "entitlements" power, and not "requirements" service. </p>
<p>The case involved Potomac Electric Power Co., which sought pricing relief on a transmission service contract it had signed with Allegheny Energy back in 1987 for delivery of power imports from Ohio Edison. Potomac Elec. </p>
<p><b>Municipal Franchise Fees.</b> A Texas court ruled that where the PUC had OK'd a rate adjustment clause to allow electric utilities to bill ratepayers for franchise fees concurrently as such fees were paid to municipal governments, without a formal rate case, the utilities could not then call on the PUC to block the municipalities from later assessing retroactive increases in the franchise fees, billed to the utilities on a percentage-of-revenues basis. </p>
<p><b>Clean Air Act.</b> A federal appeals court ruled that it was proper for Congress under the Clean Air Act to delegate authority to Native American nations (with consent from the Environmental Protection Agency) to regulate air quality on all land within tribal reservations, including activities conducted by persons not members of the tribe. Dissenting judge Ginsburg said that the delegation of authority should extend only to the development of tribal implementation plans. </p>
<p> </p>
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<h3>Gas Pipelines</h3>
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<p> <b>Certification.</b> In a decision that drew the wrath of Sen. Frank Murkowski (Rep., Alaska), chairman of the Senate's Committee on Natural Resources, the FERC certified construction of the Independence and SupplyLink gas pipeline projects, but told project sponsors ANR and Transcontinental Gas Pipe Line Co. to first submit proof of contracts in hand with nonaffiliated companies to subscribe at least 35 percent of project capacity. </p>
<p>Murkowski, while pleased with the FERC's project approval, was still unhappy about the evidentiary requirement, and made his feelings known on April 27, two days after the FERC decision was issued, at the hearing where he had invited all four FERC commissioners to comment on pending federal legislation on electricity restructuring. </p>
<p>"I will want an explanation from each of you as to why you are not doing everything you can to get this pipeline built as fast and as cheaply as possible," he warned. </p>
<p>"The commission's actions in the Independence pipeline case seem to indicate that you really don't want this pipeline built." </p>
<p><b>Citygate Constraints.</b> The New York PSC approved a proposal by Rochester Gas and Electric Corp. For easing system constraints on the amount of pipeline nominations that can be made through each of the citygates used to supply RG&amp;E's natural gas distribution system, by requiring gas marketers operating on the company's system to file plans with RG&amp;E stating expected deliveries on each pipeline at different load levels for each month of the upcoming season. </p>
<p>When RG&amp;E must shift load between the two delivery points and additional costs are incurred, it will impose a surcharge on marketers whose deliveries were not within the system constraints, and then pass back the amount collected to its retail customers. </p>
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<p> </p>
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<h3>Power Plants</h3>
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<p><b>Auction Prices. </b>While conceding that the $47.5 million price tag ($119 per kilowatt) was "below outcomes from other generation asset auctions," the New York PSC approved the sale of the 400-MW Albany Steam Station to PSEG Power LLC. </p>
<p>The PSC dismissed allegations by the town of Bethlehem that the price was insufficient, saying that it came as the result of "an extensive marketing effort" to attract "the broadest available range of potential purchasers." The PSC also noted that differences in plant fuels, vintages, regional market prices, and other variables make comparisons among auctions difficult. </p>
<p>"While the Town complains that the station is more valuable than the prices PSEG Power offered, no bidder shared the Town's view," the PSC observed. </p>
<p><b>Generation Divestiture.</b> The Pennsylvania PUC approved the sale by DQE Inc., parent company of Duquesne Light Co., of its seven electric generating plants to Orion Power Holdings of Baltimore for $1.7 billion. As part of the deal, Orion Power Holdings will become the provider of last resort to Duquesne Light customers. </p>
<p><b>Transfers to Affiliates.</b> The Pennsylvania PUC OK'd generation asset transfers to non-regulated affiliates for both Baltimore Gas &amp; Electric Co. and Public Service Electric &amp; Gas Co.: </p>
<ul>
<li> BGE would transfer to Constellation Generation Inc. its 20.99 percent stake in the Keystone Generating Station and its 10.56 percent stake in the Conemaugh Generating Station (all at book value), as well as its partial equity interest in Safe Harbor Power Corp., a hydroelectric power producer. </li>
<li> PSE&amp;G would transfer its interests in Keystone (22.84 percent), Conemaugh (22.5 percent), and the Peach Bottom Atomic Power Station (42.49 percent) to PSE&amp;G Power LLC and its wholly owned subsidiaries, PSEG Fossil and PSEG Nuclear, representing $2.443 billion in assets, to be recorded by the transferee at a book value between $200 million and $400 million. </li>
</ul>
<p><b>Plant Certification.</b> Saying that it must not micromanage electric companies as the industry moves toward a competitive market, the Ohio Power Siting Board issued a certificate of environmental compatibility and public need for construction and operation of the 425-MW West Lorain Combustion Turbine project to Ohio Edison, a wholly owned subsidiary of FirstEnergy. The board said it is up to Ohio Edison to decide whether to curtail load or shut down the project based on operational constraints, especially transmission constraints on the FirstEnergy system. </p>
<p> </p>
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<h3>Studies &amp; Reports</h3>
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<p> <b>Smart Meters.</b> Any move to integrate communications capability into electronic single-phase meters will tilt the market in favor of utility meter manufacturers, according to the consulting firm Frost &amp; Sullivan. </p>
<p>Otherwise, the report predicts a new era of growth for the metering industry, propelled by a growing economy and rising electric demand. </p>
<p>"Tremendous openings exist for vendors that can successfully manufacture and market the next generation of meters," says Frost &amp; Sullivan analyst Patrick Hodges. See <a href="http://www.frost.com">www.frost.com</a>. </p>
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<h3>Business Wire</h3>
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<p><b>CMS Energy Corp.</b> is participating as an asset investor by contributing access to some of its pipeline rights-of-way in a new nationwide broadband telecommunications network being built by Denver-based <b>Aerie Networks. </b>Aerie is planning to complete its 20,000-plus-mile national network in 2003. CMS Energy initially will hold about a 2.5 percent investment in Aerie in exchange for providing access to rights-of-way held by subsidiaries. Aerie also will use the rights-of-way of <b>BP Amoco, Buckeye Partners L.P., Explorer Pipeline Co., Kinder Morgan, Marathon Ashland Pipe Line, National Fuel Gas Supply Corp., Plantation Pipe Line Co., PG&amp;E Corp., Sempra Communications, Sun Pipe Line Co.</b>, and <b>TEPPCO</b>- all equity owners in Aerie. </p>
<p><b>Atlas Technologies LLC</b>, a partially owned subsidiary of Resource America Inc. and provider of web-based billing and customer care solutions to the deregulating energy and converged network services industries, has licensed its Readi Systems suite of software applications to <b>Equitable Resources Inc.</b>, an integrated energy exploration, production, transmission, distribution, and marketing company. Other clients of Atlas Technologies include <b>Dominion Retail Services</b> and <b>FirstEnergy Corp</b>. </p>
<p><b>Avista Corp.</b> has engaged <b>Merrill Lynch</b> as its investment bank and strategic adviser for <b>Avista Labs</b> to assist in evaluating the best ways to maximize the shareholder value inherent in its fuel cell technology. Avista Labs is pioneering the development and commercialization of an integrated, modular proton exchange membrane fuel cell power system targeted for the residential and small commercial markets throughout the world. Merrill Lynch will consider all options, including financial structuring and an initial public offering. </p>
</p>
<p> </p>
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<a href="/tags/allegheny-energy">Allegheny Energy</a><span class="pur_comma">, </span><a href="/tags/avista">Avista</a><span class="pur_comma">, </span><a href="/tags/baltimore-gas-electric">Baltimore Gas &amp; Electric</a><span class="pur_comma">, </span><a href="/tags/bge">BGE</a><span class="pur_comma">, </span><a href="/tags/central-hudson-gas-electric">Central Hudson Gas &amp; Electric</a><span class="pur_comma">, </span><a href="/tags/citi">Citi</a><span class="pur_comma">, </span><a href="/tags/clean-air-act">Clean Air Act</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/communication">Communication</a><span class="pur_comma">, </span><a href="/tags/congress">Congress</a><span class="pur_comma">, </span><a href="/tags/constellat">Constellat</a><span class="pur_comma">, </span><a href="/tags/constellation">Constellation</a><span class="pur_comma">, </span><a href="/tags/constellation-power">Constellation Power</a><span class="pur_comma">, </span><a href="/tags/cost">Cost</a><span class="pur_comma">, </span><a href="/tags/detroit-edison">Detroit Edison</a><span class="pur_comma">, </span><a href="/tags/dominion">Dominion</a><span class="pur_comma">, </span><a href="/tags/dsm">DSM</a><span class="pur_comma">, </span><a href="/tags/dynegy">Dynegy</a><span class="pur_comma">, </span><a href="/tags/environmental-protection-agency">Environmental Protection Agency</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/firstenergy">FirstEnergy</a><span class="pur_comma">, </span><a href="/tags/ge">GE</a><span class="pur_comma">, </span><a href="/tags/georgia-power">Georgia Power</a><span class="pur_comma">, </span><a href="/tags/interconnection">Interconnection</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/iso-new-england">ISO New England</a><span class="pur_comma">, </span><a href="/tags/lge">LG&amp;E</a><span class="pur_comma">, </span><a href="/tags/long-island-power-authority">Long Island Power Authority</a><span class="pur_comma">, </span><a href="/tags/lse">LSE</a><span class="pur_comma">, </span><a href="/tags/merrill-lynch">Merrill Lynch</a><span class="pur_comma">, </span><a href="/tags/midamerican">MidAmerican</a><span class="pur_comma">, </span><a href="/tags/midamerican-energy">MidAmerican Energy</a><span class="pur_comma">, </span><a href="/tags/network">Network</a><span class="pur_comma">, </span><a href="/tags/new-york-psc">New York PSC</a><span class="pur_comma">, </span><a href="/tags/north-dakota-psc">North Dakota PSC</a><span class="pur_comma">, </span><a href="/tags/nuclear">Nuclear</a><span class="pur_comma">, </span><a href="/tags/oatt">OATT</a><span class="pur_comma">, </span><a href="/tags/ohio-edison">Ohio Edison</a><span class="pur_comma">, </span><a href="/tags/pge">PG&amp;E</a><span class="pur_comma">, </span><a href="/tags/pjm">PJM</a><span class="pur_comma">, </span><a href="/tags/pseg">PSE&amp;G</a><span class="pur_comma">, </span><a href="/tags/pseg-power">PSEG Power</a><span class="pur_comma">, </span><a href="/tags/questar">Questar</a><span class="pur_comma">, </span><a href="/tags/reliability">Reliability</a><span class="pur_comma">, </span><a href="/tags/rep">REP</a><span class="pur_comma">, </span><a href="/tags/rochester-gas-electric">Rochester Gas &amp; Electric</a><span class="pur_comma">, </span><a href="/tags/rto">RTO</a><span class="pur_comma">, </span><a href="/tags/sempra">Sempra</a><span class="pur_comma">, </span><a href="/tags/siting">Siting</a><span class="pur_comma">, </span><a href="/tags/spinning">Spinning</a><span class="pur_comma">, </span><a href="/tags/tep">TEP</a><span class="pur_comma">, </span><a href="/tags/transco">Transco</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a> </div>
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Thu, 15 Jun 2000 04:00:00 +0000puradmin10686 at http://www.fortnightly.comNews Digesthttp://www.fortnightly.com/fortnightly/2000/05/news-digest
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>State PUCs</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Case 99-M-0631, March 22, 2000 (N.Y.P.S.C.).</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - May 1 2000</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 align="center">News Digest</h1>
<p><center> </center><br />
<div align="left"> </div>
<div align="left"></div>
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<h3>State PUCs</h3>
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<p align="left"><b>Single Party Billing.</b> The New York PSC directed major gas and electric utilities in the state "to accommodate the wishes of retail access customers" by allowing for single-party billing either by competitive suppliers or the utilities, at the discretion of customers, effective no later than Oct. 2. </p>
<p align="left">"A single bill is important to ensure the development of a robust competition in the utility industry," the PSC said. </p>
<p align="left"><b>Electric Restructuring.</b> The New York PSC opened a case to consider the future of the competitive natural gas and electricity markets and the role of regulated utilities. </p>
<p align="left">The PSC will study obstacles to rapid development of a retail market, especially for residential and small-use commercial customers, and whether utilities should sell products or services also available from private vendors. In addition, it will study funding of public benefit programs, such as for energy efficiency, research and development, and assistance to low-income customers. </p>
<p align="left">The first progress report is due in mid-June from an administrative law judge. </p>
<p align="left"><b>Gas Restructuring.</b> In late spring the Pennsylvania PUC finalized plans for retail choice in natural gas, which was set to begin in April. </p>
<ul>
<li>
<div align="left"> Issued proposed rules to standardize price and terms of service information that is provided to customers by local distribution companies and competitive suppliers. </div>
</li>
<li> OK'd interim guidelines (patterned after electricity rules) on giving public notice of changes in operational status of gas suppliers. </li>
<li> Set up a $1.2 million program for consumer education, funded by a competitively neutral and non-bypassable surcharge. </li>
</ul>
<p align="left"><b>Gas Standby Rates.</b> Affirming a prior ruling, the New York PSC rejected a call by the National Energy Marketers Association for a cut in rates (from $40.35 per dekatherm to $0.07 per dekatherm) charged by Consolidated Edison and Orange &amp; Rockland to competitive gas suppliers for backup capacity service. </p>
<p align="left">The PSC ruled that gas utilities could set the charge based on the difference between the value of capacity to make a bundled sale and the value of releasing pipeline capacity on a recallable basis. </p>
<p align="left"><b>Monopoly Abuse.</b> The Michigan PSC dismissed a complaint by Total Petroleum Inc. that Consumers Energy unlawfully abused its monopoly position by refusing to provide electric service at rates and terms acceptable to Total, which reportedly was contemplating the formation of a municipal electric utility as an alternative. </p>
<p align="left">The PSC concurred with an administrative law judge that Total was more responsible than Consumers for the breakdown of contract negotiations, citing the customer's refusal to yield on any of its demands for a short-term contract with a 60 percent rate discount, and the fact that Consumers made several concessions in the course of the negotiations. </p>
<p align="left"><b>Telephone Slamming.</b> With the number of slamming complaints dropping from 510 in March 1999 to only 97 by December, the Michigan PSC canceled an initiative to develop a third-party administrator system to tighten the verification requirements for customer requests to change service providers. </p>
<p align="left"><b>Asset Securitizations. </b>TXU, parent company of Texas Utilities Co., said it would appeal the Texas PUC's rejection of its proposal to securitize $1.65 billion in assets. Although a written order was not to be issued until April 14, the PUC had said earlier that it would allow securitization only for $357 million. </p>
<p align="left">"It is truly disheartening that the commission failed to follow the [restructuring] law passed by the 76th legislature," said Tom Baker, president of TXU Electric distribution business unit. </p>
<p align="left"><b>Fuel Cost Adjustments.</b> The Ohio PUC rejected an attempt by Toledo Edison Co. and Cleveland Electric Illuminating Co. to protect the current level of fuel clause adjustments (OK'd by the PUC in 1997) under a rate freeze ordered in the state's electric restructuring law, and thus avoid rate cuts in year 2000 for the electric fuel component (EFC) that the PUC OK'd back in 1997. </p>
<p align="left">The PUC said the new law clearly delayed any repeal current EFC rules until the expected startup of retail choice, in year 2001. </p>
<p align="left"><b>EDI Standards.</b> The New York PSC established the Internet as the preferred means of transacting electronic data interchange and called on utilities to file by the end of the year plans for standardized EDI for customer enrollment and billing functions. </p>
<p align="left">The PSC also endorsed "ANSI X-12" as the standard for formatting electronic transactions, and reaffirmed that existing business practices may need to be modified to ensure an efficient electronic data interchange process. All market participants will be required to use EDI in the exchange of retail access data beginning in 2001. </p>
<p align="left"><b>Cost Adjustment Clauses.</b> While authorizing Cheyenne Light, Fuel and Power Co. to boost electric rates by $2.1 million and gas rates by $1.2 million, the Wyoming PSC authorized the utility to implement a new "zero-based" energy cost adjustment mechanism, by which all wheeling and energy costs are removed from electric service base rates and recovered through the adjustment clause. </p>
<p align="left">The PSC said that the new rate would provide more accurate price signals and fairer tracking of price components within utility rates. </p>
<p align="left"><b>Gas Industry Research.</b> The New York PSC approved a petition by the New York Gas Group establishing a voluntary state funding mechanism for natural gas research and development programs, replacing the FERC surcharge on interstate pipelines for R&amp;D at the Gas Research Institute. </p>
<p align="left"><b>Electric Restructuring.</b> The Nevada PUC recently acted to adopt regulations in three areas in order to implement electric retail choice, but Nevada Power and Sierra Pacific companies since have gone to the courts attacking the Nevada law creating retail choice. </p>
<ul>
<li>
<div align="left"> OK'd rules governing recovery of stranded costs and transition costs associated with customer aggregation, generation, billing, and metering. </div>
</li>
<li> Received comments on a proposal on how the PUC will select providers of last resort. Starting on July 1, 2001, the provider of last resort will be the electric distribution company affiliate, which will charge a rate not to exceed rates that were in effect on July 1, 1999. </li>
<li> Took comments and held public hearings on a proposed rule for a universal tariff for meter services after determining that the rule would not impose a significant economic burden on small businesses. </li>
</ul>
<p align="left">Meanwhile, Nevada Power and Sierra Pacific on March 28 filed complaints in federal court to have the Nevada law that created the framework for a deregulated electric market in the state declared unconstitutional. The companies alleged the law will be detrimental to some customers while giving unfair advantages to others, based on regulatory decision implementing the law, and will be harmful to company shareholders. </p>
<p align="left"><b>Emergency Backup Service.</b> In a case involving a 90-megawatt experimental retail access program, the Michigan PSC upheld a complaint by CMS Marketing, Services and Trading Co. that Detroit Edison was attempting to require third-party suppliers to sign a contract obligating them to pay an emergency energy service charge that had not been approved by any regulatory authority. </p>
<p align="left"><b>Vermont Energy Efficiency.</b> Vermont on March 28 unveiled its "energy efficiency utility," which was created at the directive of the Vermont Board (See News Digest, December 1999, p. 17) to administer energy efficiency programs in the state. </p>
<p align="left">The utility, the first of its kind in the nation, will be operated by Vermont Energy Investment Corp., a non-profit organization, and will replace most programs previously run by 22 electric utilities so as to provide uniformity in services offered around the state. </p>
<p align="left">Texas Energy Efficiency. Rules adopted by the Texas PUC on March 1 the state's electric utilities to develop energy efficiency programs to offset 10 percent or more of a utility's annual growth in energy demand. </p>
<p align="left">Utilities must develop standard-offer programs to install energy efficiency measures and services, and independent service providers will deliver the services to customers. </p>
<p align="left"><b>Utility Marketing Affiliates. </b>The Wyoming PSC said it would not require structural separation of K N Energy's regulated and non-regulated activities, or require it to employ guidelines against cross subsidies developed in 1999 by the National Association of Regulatory Utility Commissioners. It explained that the gas utility's retail choice program was voluntary and limited in scope. </p>
<p align="left"> </p>
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<h3 align="left">Power Plants</h3>
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<p align="left"><b>Grid Interconnection.</b> The FERC ruled that when a power producer applies for authority to connect with the interstate electric transmission network without requesting transmission service at the same time, the interconnection service qualifies as an "element" of transmission service that is governed by the pro forma open-access transmission tariff mandated by FERC in Order 888. </p>
<p align="left"><b>Grid Interconnection.</b> Entergy proposed and filed with the FERC a pro forma tariff governing rights, obligation, and procedures for the interconnection of generating plants with its transmission facilities. </p>
<p align="left">It proposed a three-step process, including (1) a feasibility study that would take 45 business days, (2) a detailed interconnection study lasting eight to 10 weeks, and finally (3) a facility study lasting six to eight weeks. </p>
<p align="left">In response, the Electric Power Supply Association on March 22 filed a protest against the Entergy tariff and proposed its own nine-point "Bill of Rights" for interconnections. EPSA said that power producers ought to be able to request interconnection without any transmission service (to suit tolling deals) but still preserve a right of first refusal that would guarantee them a reservation of transmission capacity in the future, should they seek to exercise that right. </p>
<p align="left"><b>SO2 Auctions.</b> The Chicago Board of Trade's eighth annual acid rain allowance auction, conducted for the U.S. Environmental Protection Agency on March 27, sold 253,388 sulfur dioxide allowances, generating proceeds of over $25 million, to be returned to utilities in proportion to allowances withheld. </p>
<p align="left">In the spot auction, American Electric Power purchased the most allowances, buying 60,000 (46.73 percent of total allowances) for $7.97 million, followed by Enron North America, which bought 19,850 (15.46 percent) for $2.55 million. AEP also led all other energy companies in the seven-year advance auction, buying up 109,776 allowances (87.82 percent) for $7.5 million. Each allowance authorizes a power plant to emit 1 ton of SO2 in a designated year or any year thereafter. For complete results, see <a href="http://www.epa.gov/acidrain/auctions/aucmain.html">www.epa.gov/acidrain/auctions/aucmain.html</a>. </p>
<p align="left"><b>Auction Sale Proceeds.</b> The New York PSC modified a proposal by Orange and Rockland Utilities for distributing the gain on the sale of its generation assets by requiring the company to set aside a portion of the gain for programs aimed at "competitive enhancement." </p>
<p align="left">The PSC also allowed O&amp;R to recover certain load pocket mitigation costs (call option payments) through its energy cost adjustment mechanism rather than through a deduction from the divestiture proceeds. </p>
<p align="left"><b>NOx Reductions.</b> The Wisconsin PSC approved a plan by the state's electric utilities to spend approximately $950 million to reduce nitrogen oxide emissions from their generating plants in order to meet federal goals for emissions reduction mandated by the Clean Air Act and the Environmental Protection Agency. </p>
<p align="left">The PSC will allow each investor-owned utility to propose a method for disclosing NOx compliance costs and recovering them in base rates, rather than through a surcharge. </p>
<p align="left">It declined to allow depreciation of such costs, explaining that "the useful life of NOx controls remains uncertain." The PSC added that depreciation could cause the utilities to lose a significant amount of revenue if the controls become "prematurely obsolete." </p>
<p align="left"><b>Colstrip Sales Price.</b> Expressing "serious concerns" about whether the $230.4 million sale price represented fair market value, the Oregon PUC denied Portland General Electric Co.'s application to sell its 20 percent interest in the Colstrip generating units 3 and 4 to PP&amp;L Global. </p>
<p align="left">The PUC noted that PUC staff analysis showed ratepayers would suffer a $71.3 million loss from Colstrip's sale over the remaining 26-year life of the plant. </p>
<p align="left"><b>Centralia Sales Proceeds.</b> The Wyoming and Oregon commissions approved the sale by PacifiCorp of its 47.5 percent interest in the Centralia plant, and its 47.5 percent interest in the Centralia mine to TECWA Power and TECWA Fuel, respectively, both subsidiaries of TransAlta Energy Corp., but the two PUCs disagreed on a method to allocate the gain from the sale of the 1,340-MW coal-fired plant. Idaho differed as well in reviewing Avista Corp.'s sale of its 17.5 percent interest. </p>
<ul>
<li>
<div align="left"> . OK'd PacifiCorp's proposed use of a depreciation reserve method, where the total net gain is shared among its retail jurisdictions and between customers and shareholders. The method delineates the percentage of capital costs recovered through customer rates and the percentage of such costs that remain on the company's books. </div>
</li>
<li> . Found "no nexus between the proportion of the book value that has been depreciated and the proportion of the gain that should go to customers." Instead, the PUC said it preferred a method of assigning gain to the party that has born the risk and favored an allocation of a 95 percent share for ratepayers and 5 percent to shareholders in order to protect ratepayers from harm from the sale. But the PUC clarified that that allocation is for accounting purposes only, and that it will make a final decision in PacifiCorp's pending rate case docketed as UE 111. </li>
<li> . Ordered Avista to return the $6.8 million Idaho share of its after-tax gain to Idaho ratepayers in the form of a 1.3 percent rate cut over the next eight years. </li>
</ul>
<p align="left"><b>Exempt Wholesale Generators.</b> A ruling issued by the Delaware PSC supports designation of generating facilities owned in part by Conectiv subsidiaries, Delmarva Power &amp; Light Co. and Atlantic City Electric Co., as eligible facilities under federal law. </p>
<p align="left">The companies sought the ruling to allow for the sale of their interest in the Peach Bottom, Salem, and Hope Creek Nuclear plants to PSEG Nuclear LLC, an exempt wholesale generator. </p>
<p align="left">The PSC found that continued ownership of an interest in the plants was not necessary for reliability of electric service in Delaware and that during past periodic outages at the plants delmarva had been able to acquire substitute power to meet its load demands. </p>
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<p align="left"><b>Northern Border Project</b>. Approving a "rolled-in" rate treatment for the $94.4 million project, the Federal Energy Regulatory Commission approved Northern Border Pipeline Co.'s Project 2000, a 34-mile pipeline going from Chicago to a delivery point near North Hayden, Ind., that will provide a direct link between Canadian natural gas supplies and the Northern Indiana markets. </p>
<p align="left">The FERC rejected arguments that existing shippers will subsidize the project, but yielded somewhat by requiring Northern Border to file for new initial rates should cost overruns occur before the facilities go into service, thus the existing shippers an opportunity to object to the inclusion in their rates of cost overruns from Project 2000. </p>
<p align="left">In affirming a need for the project, the FERC noted the 10-year contracts with five shippers: El Paso Energy Marketing Co., Bethlehem Steel Corp., Northern Indiana, Peoples Energy Services Corp., and Peoples Gas Light &amp; Coke Co. </p>
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<p align="left"><b>Uniform Business Practices.</b> An interim report on an initiative to create uniform business practices in the deregulating electric industry, prepared for the Edison Electric Institute by Wayfinder Group, states that agreements have been reached among stakeholders in several areas, including customer information, switching, and billing. </p>
<p align="left">The report states that customer switching generally should occur on the customer's meter read date, and that the Internet is widely accepted as the most efficient and forward-looking means for certified market stakeholders to obtain information authorized for release. </p>
<p align="left">More workshops are scheduled for June, before the anticipated July release of the final report. See <a href="http://ubpnet.org/">http://ubpnet.org/</a>. </p>
<p align="left"><b>Market Power.</b> A study from the Department of Energy concludes that the exercise of market power could significantly offset the projected benefits of competition in electricity generation markets. </p>
<p align="left">It notes that in markets already restructured, such as in California and the United Kingdom, researchers have found that wholesale power prices have been as much as 75 percent above competitive levels at times. </p>
<p align="left">"Because new plants must recover their capital costs as well as their operating costs to be attractive investments, there will be situations in which owners of existing plants who have market power can profitably raise prices above the competitive level without triggering entry," the report says. See <a href="http://www.doe.gov/HMP-0308.pdf">www.doe.gov/HMP-0308.pdf</a>. </p>
<p align="left"><b>Gas Storage Capacity.</b> Regulatory changes coupled with steady growth in natural gas consumption are expected to trigger a 21 percent increase in gas storage capacity over the next 15 years, according to a new GRI study, "Natural Gas Storage Overview in a Changing Market Environment." The study estimates that storage capacity for working gas in the lower 48 states will grow from 3.8 trillion cubic feet in 1998 to 4.6 trillion cubic feet in 2015. </p>
<p align="left">"These trends are already beginning to have a major impact on gas storage operations and will only be magnified in the future," said John Cochener, GRI project manager and principal analyst for resource evaluation. </p>
<p align="left">"We are already seeing increases in the value of well-placed storage facilities, particularly those able to capitalize on regulatory changes that allow for greater operating flexibility." </p>
<p align="left"><b>Electric Customer Choice. </b>The New York PSC announced on March 14 that an independent group, the Center for the Advancement of Energy Markets, places the Empire State behind only Pennsylvania in establishing customer choice in electricity. </p>
<p align="left">In determining the rankings of the 50 states and the District of Columbia, the center examined 18 attributes, assigning numerical scores to each attribute to develop a composite score for each state. </p>
<p align="left"> </p>
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<h3 align="left">Transmission &amp; ISOs</h3>
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<p align="left"><b>ISO-Power Pool Combinations.</b> On March 16 and March 22, respectively, the boards of directors of the Midwest Independent System Operator (MISO) and MAPPCOR (the corporate contractor for MAPP, the Mid-Continent Area Power Pool) OK'd four definitive agreements to combine the two organizations: </p>
<ul>
<li>
<div align="left"> Describes MAPPCOR assets, assumption of liabilities, and hiring employees by MISO. </div>
</li>
<li> Covers the period between execution of the definitive agreements and closing. </li>
<li> Assures MAPP members who do not join MISO that transmission services will be provided for at least six years from MISO's operational date. </li>
<li> Assures MAPP members that such services will be provided under the MAPP restated agreement for at least six years from MISO's operational date. </li>
</ul>
<p align="left">Closing of the deal will occur when two-thirds of MAPP load joins the Midwest ISO. </p>
<p align="left"><b>RTO Oversight.</b> By April 5, the Virginia commission was to have received legal briefs addressing its role in governing the formation of state-mandated regional transmission entities for electric utilities. </p>
<p align="left">Specifically, the commission had asked for a legal analysis of whether federal law preempts state laws or rules aimed at restructuring the electric transmission sector. </p>
<p align="left"><b>Canadian Transmission.</b> The Alberta Energy and Utilities Board OK'd revenue requirements, rate design, and tariffs for ESBI Alberta Ltd, the Alberta electric industry's independent transmission administrator (ITA) that administers the province-wide grid. </p>
<p align="left">It approved a standard offer process providing financial incentives for new generators to locate in parts of the province where transmission constraints need to be addressed. </p>
<p align="left"> </p>
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<h3 align="left">Internet Commerce</h3>
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<p align="left"><b>Utility Industry Structure. </b>Claiming regulated energy industries are "at risk of being largely bypassed by one of the most profound technological changes of the last thousand years," E-Comm.Com on March 28 filed a petition at the FERC for the FERC to open a rulemaking proceeding examining the impact of electronic commerce on those industries. </p>
<p align="left">The petition backs E-Comm.Com's assertion that the energy industry is "at risk of losing control of [its] collective corporate destiny to businesses that have barely been created" by comparing the market capitalization of 15 e-commerce companies ($1.145 trillion) - none of which were even in existence as public companies when the FERC initiated its policy liberalizing energy markets in October 1985 - with that of some 27 large energy companies (only $193 billion). See <a href="http://www.energyecomm.com/">www.energyecomm.com/</a>, </p>
<p align="left">Aggregator Licenses. Connecticut regulators granted electric aggregator licenses to two companies seeking authority to provide Internet-based power sales services to consumers: </p>
<ul>
<li>
<div align="left"> Would offer electricity aggregation services to all customer classes, including residential and commercial, with electricity purchased bundled with telephone, Internet access, cable television, and home security services under a single account, with no membership fees. </div>
</li>
<li> would receive compensation from licensed electric suppliers. </li>
<li> . Run by CIBA, a for-profit subsidiary of Connecticut Business and Industry Association, and would offer electric aggregation services to association members, without taking title to electric supply. Also would be compensated by electric suppliers, with no surcharge to CIBA members. </li>
</ul>
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<h3 align="left">Business Wire</h3>
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<p align="left">Energycentric.Com has formed the first online business-to-business marketplace dedicated to the equipment and services side of the energy industry. Energycentric.Com will bring e-commerce to utilities and their suppliers without requiring significant investments in resources and technology by using the Internet as a marketplace. The website is designed for buying and selling products and services that go into the construction, maintenance, and operation of an energy delivery infrastructure for electricity and natural gas. </p>
<p align="left">Xenos Group has announced the wireless capability of its flagship product, Documorph, which delivers information such as bills, statements, and notices to wireless devices, such as cell phones. </p>
<p align="left">CMS Energy Corp., Marathon Ashland Petroleum LLC, and TEPPCO Partners L.P. have entered into an agreement to form a limited liability company that will own and operate an interstate refined petroleum products pipeline extending from the U.S. Gulf Coast to Illinois. Each of the companies will own a one-third interest in the LLC. The joint venture will build a 70-mile, 24-inch-diameter pipeline connecting TEPPCO's facility in Beaumont, Texas, with the start of an existing 720-mile, 26-inch-diameter pipeline extending from Longville, La., to Bourbon, Ill. The "Centennial Pipeline" will pass through portions of seven states. </p>
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<h3 align="left">Courts</h3>
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<p align="left"><b>Native Load Preference.</b> The U.S. Supreme Court has let stand a 1999 ruling by a federal appeals court that the FERC could not require an electric utility to curtail electrical transmission to the company's wholesale customers on a comparable basis with its retail native load customers when experiencing power constraints. </p>
<p align="left"></p>
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<a href="/tags/aep">AEP</a><span class="pur_comma">, </span><a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/avista">Avista</a><span class="pur_comma">, </span><a href="/tags/billing">Billing</a><span class="pur_comma">, </span><a href="/tags/clean-air-act">Clean Air Act</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/consumers-energy">Consumers Energy</a><span class="pur_comma">, </span><a href="/tags/cost">Cost</a><span class="pur_comma">, </span><a href="/tags/department-energy">Department of Energy</a><span class="pur_comma">, </span><a href="/tags/detroit-edison">Detroit Edison</a><span class="pur_comma">, </span><a href="/tags/edison-electric-institute">Edison Electric Institute</a><span class="pur_comma">, </span><a href="/tags/entergy">Entergy</a><span class="pur_comma">, </span><a href="/tags/environmental-protection-agency">Environmental Protection Agency</a><span class="pur_comma">, </span><a href="/tags/epsa">EPSA</a><span class="pur_comma">, </span><a href="/tags/esb">ESB</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/general-electric">General Electric</a><span class="pur_comma">, </span><a href="/tags/interconnection">Interconnection</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/it">IT</a><span class="pur_comma">, </span><a href="/tags/midwest-iso">Midwest ISO</a><span class="pur_comma">, </span><a href="/tags/miso">MISO</a><span class="pur_comma">, </span><a href="/tags/national-association-regulatory-utility-commissioners">National Association of Regulatory Utility Commissioners</a><span class="pur_comma">, </span><a href="/tags/new-york-psc">New York PSC</a><span class="pur_comma">, </span><a href="/tags/nuclear">Nuclear</a><span class="pur_comma">, </span><a href="/tags/order-888">Order 888</a><span class="pur_comma">, </span><a href="/tags/pacificorp">PacifiCorp</a><span class="pur_comma">, </span><a href="/tags/peoples-gas">Peoples Gas</a><span class="pur_comma">, </span><a href="/tags/portland-general-electric">Portland General Electric</a><span class="pur_comma">, </span><a href="/tags/rto">RTO</a><span class="pur_comma">, </span><a href="/tags/so2">SO2</a><span class="pur_comma">, </span><a href="/tags/storage">storage</a><span class="pur_comma">, </span><a href="/tags/tep">TEP</a><span class="pur_comma">, </span><a href="/tags/texas-utilities">Texas Utilities</a><span class="pur_comma">, </span><a href="/tags/toledo-edison">Toledo Edison</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a><span class="pur_comma">, </span><a href="/tags/us-environmental-protection-agency">U.S. Environmental Protection Agency</a><span class="pur_comma">, </span><a href="/tags/us-supreme-court">U.S. Supreme Court</a><span class="pur_comma">, </span><a href="/tags/wisconsin-psc">Wisconsin PSC</a> </div>
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